On October 1, You Borrow $200,000 in Order to Build

question 26

Multiple Choice

On October 1, you borrow $200,000 in order to build a new facility. The loan is for 10 years, at 7% interest, and semiannual interest payments are due each April and October. The journal entry to record the issuance of the promissory note should:

• A) debit Notes Payable for $200,000, debit Interest Expense for $14,000, credit Cash for $200,000, and credit Interest Payable for $14,000.
• B) debit Accrued Interest for $14,000 and credit Cash for $14,000.
• C) debit Cash for $200,000 and credit Notes Payable for $200,000.
• D) debit Cash for $200,000, debit Interest Expense for $14,000, credit Notes Payable for $200,000, and credit

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Definitions:

Proof of Claim

A written statement filed by a creditor in a bankruptcy case stating the amount owed by the debtor.

Creditors

Individuals or entities that are owed money by debtors, typically arising from financial obligations like loans or credit agreements.

Funds

Financial resources, including money or other assets, that are set aside for a specific purpose or investment.

Chapter 7's Federal Exemptions

Specific exemptions under Chapter 7 bankruptcy law that allow individuals to keep certain assets from being used to pay creditors.