On October 1,a $30,000,6%,3-year installment note payable is issued by a company.The note requires that $10,000 of principal plus accrued interest be paid at the end of each year on September 30.The issuer's journal entry to record the second annual interest payment would include:
A)A debit to Interest Expense for $1,800
B)A debit to Interest Expense for $1,200
C)A credit to Cash for $11,800
D)A credit to Cash for $10,000
E)A debit to Notes Payable for $1,200

Question

Quizplus · Accepted Answer

Interest expense = ($30,000 - $10,000) x 6% = $1,200

On October 1,a $30,000,6%,3-Year Installment Note Payable Is Issued by a Company.The