Transaction 3A – Dec. 1, Y3: Jensen Corporation borrowed from its bank $10,000 o
ID: 2464683 • Letter: T
Question
Transaction 3A – Dec. 1, Y3: Jensen Corporation borrowed from its bank $10,000 on a 90-day note at 12%. The note and interest were to be paid upon maturity in Y4. Give all journal entries to record this transaction on Dec. 1, Y3.
Q26. Indicate the account title to be debited by $10,000.
A. Acct Receivable B. Cash C. Interest Expense
D. Accounts Payable E. Note Payable
Q27. Indicate the account title to be credited by $10,000.
A. Acct Receivable B. Cash C. Interest Expense
D. Accounts Payable E. Note Payable
Transaction 3B – Dec. 31, Y3: Prepare the adjusting entry to record accrued interest on the note.
Q28. How much interest expense would be reported in Y3?
A. $0 B. $100 C. $300 D. $1,200
Q29. Indicate the account title to be debited.
A. Acct Payable B. Cash C. Interest Expense D. Interest Payable E. Treasury Stock
Q30. Indicate the account title to be credited.
A. Acct Payable B. Cash C. Interest Expense D. Interest Payable E. Treasury Stock
Explanation / Answer
26.
The account title to be debited by $10,000 is "cash".
27.
The account title to be crdited by $10,000 is "note payable".
28.
The amount of interest payable to be reported Y3 should be calcuated as follows:
Interest payable for Y3 = $10,000 × 12% × 1/12 = $100
29.
The account title to be debited is "interest expense".
30.
The account title to be credited is "interest payable".
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