Edson Corp

question 17

Multiple Choice

Edson Corp.signed a three-month, zero-interest-bearing note on November 1, 2007 for the purchase of $150,000 of inventory.The face value of the note was $152,205.Assuming Edson used a "Discount on Note Payable" account to initially record the note and that the discount will be amortized equally over the 3-month period, the adjusting entry made at December 31, 2007 will include a

• A)debit to Discount on Note Payable for $735.
• B)debit to Interest Expense for $1,470.
• C)credit to Discount on Note Payable for $735.
• D)credit to Interest Expense for $1,470.