If the Note Were Discounted on August 1 Under the Terms

question 86

Multiple Choice

If the note were discounted on August 1 under the terms of agreement with National Bank,which one of the following journal entries would Jones record?

• A) \(\begin{array}{lll}
• \text { DR Cash } & 39,867 \\
• \text { CR Note payable-National Bank } & & 39,867
• \end{array}\)
• B) \(\begin{array}{lll}
• \text { DR Cash } & 40,000 \\
• \text { CR Note receivable } & & 40,000
• \end{array}\)
• C) \(\begin{array}{lr}
• \text { DR Cash } & 39,867 \\
• \text { DR Interest expense } & 123\\\text { CR Note receivable }&&40,000
• \end{array}\)
• D) \(\begin{array}{lrr}
• \text { DR Cash } & 39,867 & \\
• \text { DR Interest expense } & 123 & \\
• \quad \text { CR Note payable-National Bank } & & 40,000
• \end{array}\)

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Definitions:

Income Statement

A report detailing a business's earnings, expenditures, and profit during a certain timeframe.

Indirect Labor

Labor costs of employees who assist in the production process but do not directly work on the production of goods or services.

Factory Overhead

Factory overhead refers to the indirect costs associated with manufacturing, including utilities, maintenance, and management salaries.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants for machines.