On December 1,Watson Enterprises Signed a $24,000,60-Day,4% Note Payable as Replacement

question 93

Multiple Choice

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded upon signing the note?

• A)Debit Accounts Receivable $24,000;credit Notes Receivable $24,000
• B)Debit Accounts Payable $24,000;credit Notes Payable $24,000
• C)Debit Accounts Payable $24,160;credit Notes Payable $24,160
• D)Debit Notes Payable $24,000;debit Interest Expense $160;credit Accounts Payable $24,160
• E)Debit Notes Payable $24,000;debit Interest Expense $160;credit Cash $24,160

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Definitions:

Gross Profit

Represents the difference between revenue and the cost of goods sold before deducting other expenses.

Earnings Per Share

A financial metric calculated by dividing a company's net income by the number of its outstanding shares, indicating profitability on a per-share basis.

Corporate Tax Rate

The percentage of corporate income that companies are required to pay to the government as tax.

EBIT

A profitability metric that accounts for all of a company's expenses except for interest and income taxes, reflecting the firm's profit.