Johnson Accepts a $5,000,7%,100-Day Promissory Note from Adam on November

question 97

Multiple Choice

Johnson accepts a $5,000,7%,100-day promissory note from Adam on November 1.What is the adjusting entry made by Johnson on December 31 to recognize the interest (using a 360-day year) ?

• A)Debit Interest Expense; credit Interest Payable for $58.33
• B)Debit Interest Expense; credit Interest Payable for $97.22
• C)Debit Interest Receivable; credit Interest Income for $58.33
• D)Debit Interest Receivable; credit Interest Income for $97.22

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Definitions:

Inflation

The pace at which average prices for products and services climb, reducing the value of money.

U.S. Exports

Products and services created in the United States and exported to foreign nations.

International Tourism

Traveling to foreign countries for leisure, business or other purposes, which contributes to the economic and cultural exchange between nations.

Foreign Capital Inflow

The entry of capital from one country into another, where it is used to purchase assets or invest in business activities, often enhancing economic development.