Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
- If equipment is purchased by issuing a 10-year, $200,000 interest bearing note at a stated rate of 8 percent (payable annually), the first interest payment, assuming it has not been previously accrued, would be entered in the accounting records by

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
- If equipment is purchased by issuing a 10-year, $200,000 interest bearing note at a stated rate of 8 percent (payable annually), the first interest payment, assuming it has not been previously accrued, would be entered in the accounting records by

Quizplus · Accepted Answer

The interest expense incurred by the company is debited to interest expense account. Therefore, debiting interest expense for $16,000 is the best choice for recording the first interest payment.

Use the Present Value and Future Value Tables Included in Appendix