Travis County Bank agrees to lend Brickyard Corporation $200,000 on January 1.Brickyard signs a $200,000, 4%, 9-month note.Interest is due at maturity on September 30.The company's fiscal year ends June 30 and adjusting entries are recorded at that time only.
-Use the information above to answer the following question.What journal entry will Brickyard make when paying the note at maturity?
A) Debit Cash and credit Notes Payable for $200,000
B) Debit Cash and credit Notes Payable for $206,000
C) Debit Notes Payable and credit Cash for $206,000
D) Debit Notes Payable and credit Cash for $200,000

Question

Quizplus · Accepted Answer

When paying the note at maturity, the company will debit Notes Payable and credit Cash for the face value of the note, which is $200,000. No additional interest payment is required since the note specifies that interest is due at maturity. Therefore, option D is the correct answer.

Travis County Bank Agrees to Lend Brickyard Corporation $200,000 on January