What is the entry to record the payment at the maturity date of the note?
A) Option: A
B) Option: B
C) Option: C
D) Option: D

Question

What is the entry to record the payment at the maturity date of the note?  
A) Option: A 
B) Option: B 
C) Option: C 
D) Option: D

Quizplus · Accepted Answer

Option B is the correct choice to record the payment at the maturity date of the note. This is because when the note matures, the borrower is required to make the full payment of both the principal and the interest at the maturity date. Therefore, the entry should be a debit to Notes Payable for the principal amount of the note and a credit to Cash for the total payment made by the borrower (principal plus interest). Option B correctly reflects this by debiting Notes Payable for $20,000 and crediting Cash for $21,200, which is the principal amount of $20,000 plus the interest of $1,200 (6% x $20,000 x 1 year).

What Is the Entry to Record the Payment at the Maturity