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

question 170

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

---

Definitions:

Reference Groups

Social groups that individuals use as a standard for evaluating their own behavior, attitudes, and values.

External Social Environment

The external factors in society that influence an organization's operation, including cultural, demographic, and social aspects.

Behavior

Refers to the actions and mannerisms made by individuals, groups, or systems.

Thought Process

The mental steps involved in processing information, solving problems, or forming judgments and opinions.