On August 1 of the Current Year,Kyle Company Borrowed $278,000

question 76

Multiple Choice

On August 1 of the current year,Kyle Company borrowed $278,000 from the local bank.The loan was for 12 months at 9 percent interest payable at the maturity date.The adjusting entry at the end of the fiscal year relating to this obligation would include a

• A) debit to interest expense of $25,020.
• B) debit to interest expense of $10,425.
• C) credit to note payable of $10,425.
• D) debit to interest receivable of $10,425.

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Definitions:

Salvage Value

Salvage value is the estimated residual value of an asset at the end of its useful life, indicating what a company expects to recover or sell the asset for.

Depreciation Expense

The calculated apportionment of the price of a tangible asset over the duration it is useful.

Components

The individual parts or elements that make up a larger product, system, or machine.

Depreciated Separately

An accounting method in which assets are depreciated individually, based on their own useful life and depreciation rate, rather than being grouped together with other assets.