On October 1,a $30,000,6%,three-Year Installment Note Payable Is Issued by a Company.The

question 55

Multiple Choice

On October 1,a $30,000,6%,three-year installment note payable is issued by a company.The note requires that $10,000 of principal plus accrued interest be paid at the end of each year on September 30.The issuer's journal entry to record the second annual interest payment would include:

• A)A debit to Interest Expense for $1,800.
• B)A debit to Interest Expense for $1,200.
• C)A credit to Cash for $11,800.
• D)A credit to Cash for $10,000.
• E)A debit to Notes Payable for $1,200.

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Definitions:

Dividend Payout Ratio

The proportion of earnings paid out as dividends to shareholders, expressed as a percentage of the company’s total earnings.

Cash Dividend

Cash payments made by a company to its shareholders, usually as a distribution of profits.

Extra Dividend

A one-time payment made by a company to its shareholders, in addition to regular dividends, usually indicative of exceptional earnings.

Special Dividend

A one-time distribution of profits by a company to its shareholders, in addition to any regular dividends.