Question

A business borrowed $51,873 on March 1 of the current year by signing a 30 day, 6% interest bearing note. Assuming a 360-day year, when the note is paid on March 31, the entry to record the payment should include a

Answer 1

Answer:

Debit to interest expenses for $259

Explanation:

Entry of Payment

Date       Account Title and Explanation     Debit        Credit

Mar 31.    Note Payable                                 $51,873

               Interest expenses                          $259

               ($51,873 * 6% * 30/360)

                       Cash                                                        $52,132

               (TO record payment)