On December 1, Watson Enterprises Signed a $24,000, 60-Day, 4

question 51

Multiple Choice

On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

• A) $320
• B) $80
• C) $0
• D) $960
• E) $160

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Definitions:

Accounts Payable

Liabilities owed by a business to its suppliers or vendors for goods and services received but not yet paid for.

General Ledger

A comprehensive set of accounts that records all financial transactions of a business, organized by account.

Subsidiary Ledger

A subsidiary ledger is a detailed ledger that contains account-specific information, supporting and connected to the general ledger for a comprehensive accounting system.

Sales Journal

A dedicated journal used to record a company's sales transactions, tracking the selling of goods and services.