On March 1, Brutto Corp.issues a 3 year 5%, $60,000 note payable.The terms of the note include monthly blended principal and interest payments of $1,799.The entry to record the second instalment payment will include a
A)debit to Notes Payable of $1,555.
B)debit to Cash of $1,799.
C)debit to Interest Expense of $250.
D)credit to Interest Expense of $244.

Question

Quizplus · Accepted Answer

The second installment payment will include a debit to Notes Payable for the principal portion of the payment. The principal portion of the second payment is $1,555, which is the total payment of $1,799 minus the interest portion of $244.