A Business Makes a Payment of $1,200 on a Note

question 120

Multiple Choice

A business makes a payment of $1,200 on a note payable,consisting of a $200 interest payment and a $1,000 principal payment.Which of the following journal entries would be recorded?

• A) Cash is credited for $1,000; Interest expense is credited for $200; and Notes payable is debited for $1,200.
• B) Notes payable is credited for $1,000; Cash is credited for $200; and Interest expense is debited for $1,200.
• C) Cash is credited for $1,200; Notes payable is debited for $1,000; and Interest expense is debited for $200.
• D) Notes payable is credited for $1,200; Cash is debited for $1,000; and Interest expense is debited for $200.