On March 1,a firm purchased equipment for $5,000,signing a 30-day note bearing interest at 12 percent a year.The entry to record the payment of the amount due on March 31 will include a debit to Notes Payable for
A) $5,050 and a credit to Cash for $5,050.
B) $5,000 and a credit to Cash for $5,000.
C) $5,000,a debit to Interest Expense for $50,and a credit to Cash for $5,050.
D) $5,000,a debit to Interest Expense for $600,and a credit to Cash for $5,600.

Question

Quizplus · Accepted Answer

The note payable is $5,000, and the interest for 30 days at 12% per annum is $50 ($5,000 * 12% * 30/365). Thus, the entry includes a debit to Notes Payable for $5,000, a debit to Interest Expense for $50, and a credit to Cash for $5,050.

On March 1,a Firm Purchased Equipment for $5,000,signing a 30-Day