Use the Following Information for Questions

question 64

Multiple Choice

Use the following information for questions:
Pluto Co.borrowed $25,000 on September 1, 2010 on a nine-month, 8% note.Interest and principal are due at maturity.
-The entry to record the transaction on September 1, 2010 would include a:

• A)Debit to cash for $23,148
• B)Credit to short-term notes payable for $25,000
• C)Debit to interest expense for $1,500
• D)Credit to interest payable for $1,852

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Definitions:

Financing Cost

The interest and other costs incurred by a company to borrow funds or access other forms of financing.

Bad Debt

Money owed to a company that is not expected to be paid by the debtor, often leading to a write-off.

Credit Policy

A Credit Policy is a set of guidelines that govern the extension of credit to customers, outlining the criteria for extending credit and the terms of repayment.

Investing Decision

Choices made by individuals or firms regarding the allocation of resources to investment opportunities with the aim of achieving additional income or capital gains.