Contributor Enterprise borrowed $2,400 on February 1,2012.All interest has been paid and properly recorded for separately.On March 31,2012,the company repaid the loan.Which of the following is the journal entry to be made at the time of the loan repayment?

A)$\begin{array}{lll}
\text { } & \mathrm{Dr.}& \mathrm{Cr.}\
{\text { Notes Payable Expense }} & 2,400 & \
\text {Cash } & & 2,400 & \
\end{array}$

B)$\begin{array}{lccc}
\text { } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Notes Payable } & 2,400& \
\quad \text { Cash } & & 2,400\
\end{array}$

C)$\begin{array}{lccc}
\text { } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } & 2,400 & \
\quad \text { Notes Payable Expense } & & 2,400\
\end{array}$

D)$\begin{array}{lccc}
\text { } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } & 2,400 & \
\quad \text { Notes Payable } & & 2,400\
\end{array}$

E)$\begin{array}{lccc}
\text { } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } & 2,400 & \
\quad \text { Notes Receivable } & & 2,400\
\end{array}$

Question

Contributor Enterprise borrowed $2,400 on February 1,2012.All interest has been paid and properly recorded for separately.On March 31,2012,the company repaid the loan.Which of the following is the journal entry to be made at the time of the loan repayment?

A)$\begin{array}{lll}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
{\text {  Notes Payable Expense }} & 2,400 & \
\text {Cash } & & 2,400 & \
\end{array}$

B)$\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Notes Payable  } &  2,400& \
\quad \text { Cash } & &  2,400\
\end{array}$

C)$\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash  } &  2,400 & \
\quad \text { Notes Payable Expense } & &  2,400\
\end{array}$

D)$\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } &  2,400 & \
\quad \text { Notes Payable  } & &  2,400\
\end{array}$

E)$\begin{array}{lccc}
\text {  } & \mathrm{Dr.}& \mathrm{Cr.}\
\text { Cash } & 2,400 & \
\quad \text { Notes Receivable  } & & 2,400\
\end{array}$

Quizplus · Accepted Answer

The journal entry for loan repayment is a debit to Notes Payable and a credit to Cash. Option B correctly shows this entry. Option A includes an incorrect account "Notes Payable Expense." Option C includes an incorrect account "Notes Payable Expense" and incorrectly shows a debit to Cash. Option D is correct but includes unnecessary wording "Cash in repayment of the loan." Option E includes an incorrect account "Notes Receivable" instead of "Notes Payable."