On October 1,you Borrow $200,000 in Order to Build a New

question 135

Multiple Choice

On October 1,you borrow $200,000 in order to build a new facility.The loan is for 10 years,at 7% interest,and semiannual interest payments are due each April and October.The journal entry to record the issuance of the promissory note should:

• A)debit Notes Payable for $200,000,debit Interest Expense for $14,000,credit Cash for $200,000,and credit Interest Payable for $14,000.
• B)debit Accrued Interest for $14,000 and credit Cash for $14,000.
• C)debit Cash for $200,000 and credit Notes Payable for $200,000.
• D)debit Cash for $200,000,debit Interest Expense for $14,000,credit Notes Payable for $200,000,and credit Interest Payable $14,000.

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