On November 1,Alan Company Signed a 120-Day,8% Note Payable,with a Face

question 116

Multiple Choice

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

• A)No adjusting entry is required.
• B)Debit Interest Payable,$120; credit Interest Expense,$120.
• C)Debit Interest Expense,$120; credit Interest Payable,$120.
• D)Debit Interest Expense,$720; credit Interest Payable,$720.
• E)Debit Interest Payable,$240; credit Interest Expense,$240.

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Definitions:

Partnership

A legal form of business operation between two or more individuals who share management and profits.

Corporation

A legal entity that is separate from its owners, offering limited liability to its shareholders, and is capable of entering contracts, suing and being sued.

Account Payable

The sum of funds that a business needs to pay back to its vendors or lenders for products or services bought on a credit basis.

Account Receivable

Debts owed by customers to a company for items or services that have been dispatched but not compensated.