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:

Monetary Policy

Actions taken by a central bank to control the money supply and interest rates in order to influence economic conditions, such as inflation and employment.

Ben Bernanke

A prominent American economist who served as the Chairman of the Federal Reserve from 2006 to 2014, known for his policies during the financial crisis of 2008.

Banging The Gong

A ceremonial act of ringing a gong, often used to signify the opening or closing of trading on a stock exchange.

Discount Rate

The charge applied by the Federal Reserve on loans provided to commercial banks and various financial establishments via its discount window.