On October 1, 2010, You Borrow $200,000 at 6% Interest

question 86

Multiple Choice

On October 1, 2010, you borrow $200,000 at 6% interest and record the promissory note. In April and again in October of the following year, you are required to pay half the annual interest to your creditor. On December 31, 2010, your journal entry for the quarter should:

• A) debit Interest Expense for $3,000 and credit Interest Payable for $3,000.
• B) debit Cash for $3,000 and credit Accrued Interest for $3,000.
• C) debit Interest Expense for $6,000 and credit Cash for $6,000.
• D) debit Interest Expense for $6,000 and credit Notes Payable for $6,000.

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Definitions:

Truth Table

A mathematical table used in logic to determine whether combinations of propositions are true or false.

Conditional

A statement or proposition that expresses a cause-and-effect relationship between two events or conditions, often formulated as "if-then."

Symbolic Logic

A branch of logic that uses symbols and operators to express logical expressions and relationships.