On November 1,2015,The Bagel Factory signed a $100,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2016.The Bagel Factory records the appropriate adjusting entry for the note on December 31,2015.In recording the payment of the note plus accrued interest at maturity on May 1,2016,The Bagel Factory would
A)Debit Interest Expense,$2,000.
B)Debit Interest Expense,$1,000.
C)Debit Interest Payable,$2,000.
D)Debit Interest Expense,$3,000.

Question

Quizplus · Accepted Answer

The correct answer is A because the interest expense for the period from November 1, 2015, to May 1, 2016, is $2,000 ($100,000 x 6% x 6/12).

On November 1,2015,The Bagel Factory Signed a $100,000,6%,six-Month Note Payable