A Company Borrows $15,000 on November 1, 2019, Giving a 6

question 35

Multiple Choice

A company borrows $15,000 on November 1, 2019, giving a 6%, 90-day note payable. The adjusting entry on December 31, 2019, would include a:

• A)credit to Interest Payable for $73.97.
• B)credit to Interest Payable for $147.95.
• C)debit to Interest Expense for $221.92.
• D)credit to Cash for $147.95.

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Definitions:

Legal Tender

Legal tender is currency that must be accepted if offered in payment of a debt; typically issued and regulated by a government.

Physical Commodity

Tangible goods that are traded, often used as inputs in the production of other goods or services, such as oil, gold, or wheat.

Precious Metal

A classification for metals that are considered rare and have a high economic value, such as gold, silver, and platinum.

Fiat Currencies

Currencies that have value primarily because of government regulation or law, rather than a physical commodity or asset backing them.