On November 1,2018,The Bagel Factory signed a $100,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2019.The Bagel Factory records the appropriate adjusting entry for the note on December 31,2018.In recording the payment of the note plus accrued interest at maturity on May 1,2019,The Bagel Factory would
A)Debit Interest Expense,$2,000.
B)Debit Interest Expense,$1,000.
C)Debit Interest Payable,$2,000.

Question

Quizplus · Accepted Answer

The correct answer is A because the interest expense is $2,000, which is calculated as $100,000 x 6% x 6/12.

On November 1,2018,The Bagel Factory Signed a $100,000,6%,six-Month Note Payable