39. You issued a $54,000, four-month, 12% note payable on October 1, 2017, which

Question

39. You issued a $54,000, four-month, 12% note payable on October 1, 2017, which of the following should you have included in your journal entry on the note's maturity date? (Round your answer to the nearest whole number.) Assume December 31 was your fiscal year end. A) a credit to Notes Payable for $56,160 B) a credit to Cash for $54,000 C) a debit to Interest expense for $540 D) a debit to interest payable for $540 40. If a long-term debt is paid in installments, the business will report the current portion of the note payable as a current liability. TRUE FALSE

Explanation / Answer

39) C is correct

Interest for 3 months is alread charged in Fiscal Year 2017 , remaining interest will be charged on maturity.i.e 54000*12%*1/12 = 540

Thus Interest expense will be debited by 540 on maturity

40) True,

Long term debt which is paid in installment, the amount of installment paid is shown under the head current liability as the same becomes due within a year.

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.