On September 1, 2016, a company issued a $50,000, 6-month, 9% note payable to purchase equipment.At December 31, 2016, the company records an adjusting entry to accrue interest incurred by not paid.The company pays the note with interest at the maturity date.
-Use the information above to answer the following question.What is the entry to record the payment of interest at the maturity date of the note?
A) Debit Interest Expense for $2,000 debit Interest Payable for $2,500, and credit Cash for $4,500
B) Debit Notes Payable for $50,000, debit Interest Expense for $4,500, and credit Cash for $54,500
C) Debit Interest Payable for $1,500, debit Interest Expense for $750, and credit Cash for $2,250
D) Debit Interest Expense for $2,250, and credit Cash for $2,250

Question

Quizplus · Accepted Answer

The company must record the payment of the note with interest as a debit to Notes Payable for the face value of the loan ($50,000), a debit to Interest Expense for the amount of interest expense accrued ($4,500), and a credit to Cash for the total payment amount ($54,500).

On September 1, 2016, a Company Issued a $50,000, 6-Month