Majeau Tri Ltd bought display racks with a fair market value of $150,000. The corporation signed a 3-year interest-bearing note at 8%. The entry to record the transaction would include:
A) A debit to Interest Expense for $12,000.
B) A credit to Notes Payable for $39,692.
C) A credit to Notes Payable for $150,000.
D) A credit to Interest Payable for $400.
E) A debit to Notes Payable for $150,000.

Question

Quizplus · Accepted Answer

The entry to record the purchase of display racks would include a credit to Notes Payable for the full amount of the fair market value, which is $150,000.

Majeau Tri Ltd Bought Display Racks with a Fair Market