Question

Explain SHOW WORK 16. On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)
a. Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000.
b. Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120.
c. Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240.
d. Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240.
e. Debit Cash $9,240; credit Notes Payable $9,240.

Answer 1

Answer:

c. Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240.

Explanation:

Interest Expense = $9,000 x 0.08 x 120 / 360 = $240