On November 1,Alan Company Signed a 120-Day,8% Note Payable,with a Face

question 53

Multiple Choice

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the adjusting entry for the accrued interest at December 31 on the note?

• A)Debit interest expense,$0;credit interest payable,$0.
• B)Debit interest payable,$120;credit interest expense,$120.
• C)Debit interest expense,$120;credit interest payable,$120.
• D)Debit interest expense,$720;credit interest payable,$720.
• E)Debit interest payable,$240;credit interest expense,$240.

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Definitions:

Cumulative Inflation

The total change in the price level of goods and services in an economy over a set period of time, typically resulting in a decrease in purchasing power of the currency.

Temporal Method

An accounting method used to translate foreign currency financial statements into the reporting currency of a parent company, focusing on the timing of transactions.

Ending Inventory

The total value of all inventory a company has in stock at the end of an accounting period.

Average Cost

An inventory costing method where the cost of goods sold and ending inventory is determined by averaging the cost of all purchases.