On December 1, 2020, Ruby Ltd

question 2

Multiple Choice

On December 1, 2020, Ruby Ltd. borrowed $ 180,000 from their bank, by signing a four-month, 5% interest-bearing note. Assuming Ruby has a December 31 year end and does NOT use reversing entries, the journal entry to record payment of this note on April 1, 2021 will include a

• A) credit to Note Payable of $ 180,000.
• B) debit to Interest Expense of $ 3,000.
• C) debit to Interest Payable of $ 2,250.
• D) debit to Interest Payable of $ 750.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, capable of owning property, entering into contracts, and being subject to lawsuits.

Business Revenues

The income generated from normal business operations, typically from the sale of goods and services to customers.

Proprietorship

A business owned and operated by a single individual, who is entitled to all profits and responsible for all debts.

Easy And Cheap

Descriptive terms indicating something is not difficult to do or obtain and does not require a lot of resources, specifically money, to acquire.