A $900,000 Note Payable Requires 10% Annual Interest with Interest

question 102

Multiple Choice

A $900,000 note payable requires 10% annual interest with interest due monthly on the 15^th of each month.An interest payment of $7,500 was made on April 15 and the next payment is due on May 15.As of April 30,$3,750 of interest expense has accrued.How would the company record the related adjusting entry?

• A)Debit Interest Expense for $3,750 and credit Cash for $3,750.
• B)Debit Interest Expense for $3,750 and credit Interest Payable for $3,750.
• C)Debit Interest Payable for $3,750 and credit Cash for $3,750.
• D)Debit Interest Payable for $3,750 and credit Interest Expense for $3,750.
• E)Debit Interest Expense for $3,750,credit Interest Payable for $3,750 and credit cash for $7,500.

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Definitions:

Equal Bargaining Power

A condition in labor negotiations where both the employer and employees (or their representatives) have similar negotiating strength and influence.

Competitive Markets

Markets where multiple suppliers offer products or services, leading to competition that benefits consumers through better options and prices.

Workplace Governance

The system of rules, practices, and processes by which a workplace is directed and controlled, encompassing nearly all aspects of its management and administration.

Employer Association

An organization that represents the interests of employers in negotiations with labor unions and in public policy discussions, providing a platform for collective bargaining and advocacy.