The journal entry required on the company's books to record the note payable on July 1, 20A would include which of the following?
A) A credit to notes payable for $12,960.
B) A debit to cash for $11,040.
C) A debit to interest expense for $960.
D) A credit to notes payable for $12,000.

Question

Quizplus · Accepted Answer

The journal entry to record the note payable would involve a debit to cash for the amount received, which is $12,000. There is no interest expense recorded at this point, so C is incorrect. The credit to notes payable should also be $12,000, not $12,960 as stated in A. Therefore, the correct answer is D.

The Journal Entry Required on the Company's Books to Record