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

question 141

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 is the journal entry that should be recorded upon signing the note?

• A) Debit Notes Payable $24,000; debit Interest Expense $160; credit Accounts Payable $24,160.
• B) Debit Accounts Payable $24,160; credit Notes Payable $24,160.
• C) Debit Notes Payable $24,000; debit Interest Expense $160; credit Cash $24,160.
• D) Debit Accounts Receivable $24,000; credit Notes Receivable $24,000.
• E) Debit Accounts Payable $24,000; credit Notes Payable $24,000.

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Definitions:

Breaching Party

The party in a contract who fails to fulfill their contractual obligations, thereby violating the agreement.

Objective Impossibility

A situation where it is not possible to carry out a contract's obligations due to uncontrollable external circumstances.

Bankruptcy

A legal proceeding involving a business or individual that is unable to repay outstanding debts, leading to the disposition of assets to pay creditors.

Equitable Remedies

Non-monetary judicial remedies, such as injunctions or specific performance, granted when traditional legal remedies are inadequate to resolve a dispute fairly.