On October 1,2013,you Borrow $200,000 at 6% Interest and Record

question 4

Multiple Choice

On October 1,2013,you borrow $200,000 at 6% interest and record the promissory note.In April and again in October of the following year,you are required to pay half the annual interest to your creditor.On December 31,2013,your adjusting journal entry for the quarter should:

• A)debit Interest Expense for $3,000 and credit Interest Payable for $3,000.
• B)debit Interest Payable for $3,000 and credit Interest Expense for $3,000.
• C)debit Interest Expense for $6,000 and credit Cash for $6,000.
• D)debit Interest Expense for $6,000 and credit Interest Payable for $6,000.

---

Definitions:

Binding Contract

An agreement that is legally enforceable, with clearly defined obligations and rights for all parties involved.

Outdated

Refers to information, technology, or methods that are no longer current or effective due to newer alternatives or advancements.

Formal Contracts

Formal contracts are legally binding agreements that must follow a prescribed format or be executed in a certain manner to be valid, such as being in writing and signed by all parties.

Contracts under Seal

Formal agreements that are validated by a wax seal or its modern equivalent, often denoting a heightened sense of formality and solemnity.