On November 1, 2014, Chancellor Co

question 13

Multiple Choice

On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a 12%, six-month note payable, all due at maturity. The interest on this loan is stated separately. At December 31, 2014, the adjustment for this note includes:

• A) an increase to Notes Payable for $1,600.
• B) an increase to Interest Payable for $1,600.
• C) an increase to Interest Expense for $3,200.
• D) a decrease to Cash for $4,800.

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Definitions:

Common Dividend Payable

Liabilities on a company's balance sheet representing the amount of dividends that are owed to shareholders on common stock.

Shares Outstanding

Shares outstanding refer to all shares currently owned by shareholders, including restricted shares owned by company insiders and share blocks held by institutional investors.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and gives holders voting rights and a share in the company's profits via dividends.

Paid-In Capital

Funds that shareholders contribute to a company in exchange for equity, beyond the par value of the shares.