A Business Makes a Payment of $1,400 on a Note

question 156

Multiple Choice

A business makes a payment of $1,400 on a note payable, consisting of a $200 interest payment and a $1,200 principal payment. Which of the following journal entries would be recorded?

• A)Cash is credited for $1,200; Interest Expense is credited for $200; and Notes Payable is debited for $1,400.
• B)Notes Payable is credited for $1,200; Cash is credited for $200; and Interest Expense is debited for $1,400.
• C)Cash is credited for $1,400; Notes payable is debited for $1,200; and Interest Expense is debited for $200.
• D)Notes Payable is credited for $1,400; Cash is debited for $1,200; and Interest Expense is debited for $200.

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