On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded upon signing the note?
A)Debit Accounts Receivable $24,000;credit Notes Receivable $24,000
B)Debit Accounts Payable $24,000;credit Notes Payable $24,000
C)Debit Accounts Payable $24,160;credit Notes Payable $24,160
D)Debit Notes Payable $24,000;debit Interest Expense $160;credit Accounts Payable $24,160
E)Debit Notes Payable $24,000;debit Interest Expense $160;credit Cash $24,160

Question

Quizplus · Accepted Answer

The journal entry should reflect the replacement of an account payable with a note payable. Therefore, debit Accounts Payable $24,000; credit Notes Payable $24,000. No interest expense or cash is involved in this transaction yet.

On December 1,Watson Enterprises Signed a $24,000,60-Day,4% Note Payable as Replacement