On August 1, Amy Company Borrowed $40,000 from Another Company

question 122

Multiple Choice

On August 1, Amy Company borrowed $40,000 from another company on a 6%, one-year note. The journal entry on December 31 would include which of the following?

• A)A debit to Notes Payable for $40,000.
• B)A debit to Interest Receivable for $1,000.
• C)A credit to Interest Payable for $2,400.
• D)A debit to Interest Expense for $1,000.

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Definitions:

Quota Rent

The earnings that accrue to license holders in a system where import quantity is limited by quotas; it represents the difference between domestic prices and world prices due to restricted supply.

Government Imposes

The act of the government enacting regulations, taxes, restrictions, or laws that directly affect business practices, individual behavior, or market operations.

Shrimp Market

A specialized market segment dealing with the buying and selling of shrimp for consumption.

Price Floor

A government or regulatory imposed minimum price for a good or service, aimed to prevent the market price from falling below a certain level.