A Gift Shop, Located in a Hotel, Signs a Three-Month $\quad$

question 30

Multiple Choice

A gift shop, located in a hotel, signs a three-month note payable to help finance increases in inventory for the Christmas shopping season.The note is signed on November 1 in the amount of $60,000 with annual interest of 12%.What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest?

• A) Interest Expense.................... \(\quad \)1,200
• \(\quad \)Interest Payable......................... \(\quad \) \(\quad \) \(\quad \)1,200
• B) Interest Expense................... \(\quad \)1,800
• \(\quad \)Interest Payable........................ \(\quad \) \(\quad \) \(\quad \)1,800
• C) Interest Expense................... \(\quad \)1,200
• \(\quad \)Cash.................................... \(\quad \) \(\quad \) \(\quad \) \(\quad \)1,200
• D) Interest Expense................... \(\quad \)1,200
• \(\quad \)Note Payable......................... \(\quad \) \(\quad \) \(\quad \) \(\quad \)1,200

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Definitions:

Frieda Fromm-Reichmann

A psychoanalyst known for her groundbreaking work in the treatment of schizophrenia and her concept of "the schizophrenogenic mother."

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Sociocultural Therapist

A mental health professional who incorporates sociocultural factors, including societal norms and cultural backgrounds, into the treatment of psychological disorders.

Schizophrenic

Refers to an individual diagnosed with schizophrenia, a mental disorder characterized by disruptions in thought processes, perceptions, emotional responsiveness, and social interactions.