On July 1,2013,Avery Services Issued a 4% Long-Term Note Payable

question 100

Multiple Choice

On July 1,2013,Avery Services issued a 4% long-term note payable for $10,000.It is payable over a 5-year term in $2,000 principal installments on July 1 of each year.Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period.
-What happens on December 31,2013 before statements are prepared?

• A) Avery must accrue $200 of interest expense.
• B) Avery must accrue for the coming $2,000 principal payment.
• C) Avery must pay out $200 of interest expense to the note holder.
• D) Avery does not need to take any actions.

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