On the First Day of the Fiscal Year, Hawthorne Company

question 118

Multiple Choice

On the first day of the fiscal year, Hawthorne Company obtained an $88,000, seven-year, 5% installment note from Sea Side Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would record to make the first annual payment due on the note would include a

• A) debit to Cash for $15,208
• B) credit to Notes Payable for $10,808
• C) debit to Interest Expense for $4,400
• D) debit to Notes Payable for $15,208

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Definitions:

Wheat

A cereal grain, originally from the Levant region of the Near East and Ethiopian Highlands, that is a global staple food.

Corn

A cereal plant (Zea mays) that produces large kernels on a cob; also used to refer to the kernels themselves, which are a staple food in many parts of the world.

Natural Ecosystems

Natural ecosystems are biological communities that interact with their physical environment, functioning through naturally occurring processes without significant human intervention.

Dead Organic Material

Non-living plant and animal matter that has not yet decayed, providing nutrients and energy sources for decomposers in ecosystems.