The Hawk Co

question 123

Multiple Choice

The Hawk Co.borrowed $30,000 from a bank,depositing those funds in its bank account and signing a formal agreement to repay the loan in two years.What is the correct journal entry for this transaction?

• A) Debit notes payable and credit cash for $30,000
• B) Debit notes payable and debit cash for $30,000
• C) Credit notes payable and credit cash for $30,000
• D) Debit cash and credit notes payable for $30,000

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Definitions:

Effective Rate

The actual interest rate earned or paid on an investment or loan, taking into account the compounding of interest.

Quarterly Compounding

Interest calculation that occurs four times a year, effectively increasing the amount of interest accrued over time.

Effective Rate

The interest rate on a loan or financial product that reflects the compounding periods in a year, presenting a true annual rate of return.

Effective Rate

The interest rate for a loan or financial product recalculated from its nominal rate to represent an annual compound interest rate, paid in arrears.