On January 1,2010,Merrill Company Borrowed $100,000 on a 10-Year,7% Installment

question 66

Multiple Choice

On January 1,2010,Merrill Company borrowed $100,000 on a 10-year,7% installment note payable.The terms of the note require Merrill to pay 10 equal payments of $14,238 each December 31 for 10 years.The required general journal entry to record the first payment on the note on December 31,2010 is:

• A)
• \[\begin{array} { | l | r | r | }
• \hline \text { Notes Payable } & 7,238 & \\
• \hline \text { Interest expense } & 7,000 & \\
• \hline \text { Cash } & & 14,238 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | r | r | }
• \hline \text { Notes Payable } & 7,000 & \\
• \hline \text { Interest expense } & 7,238 & \\
• \hline \text { Cash } & & 14,238 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | r | r | }
• \hline \text { Notes Payable } & 10,000 & \\
• \hline \text { Interest expense } & 7,000 & \\
• \hline \text { Cash } & & 17,000 \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | c | r | r | }
• \hline \text { Notes Payable } & 14,238 & \\
• \hline \text { Cash } & & 14,238 \\
• \hline
• \end{array}\]
• E)
• \[\begin{array} { | l | r | r | }
• \hline \text { Notes Payable } & 10,000 & \\
• \hline \text { Interest expense } & 4,238 & \\
• \hline \text { Cash } & & 14,238 \\
• \hline
• \end{array}\]

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Definitions:

World Bank

An international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.

Borrowing Money

The act of obtaining funds from another party with the promise of repaying the principal along with potential interests.

Shareholder Value Model

A business strategy focused on increasing the returns to shareholders, often prioritizing it above other considerations.

Corporate Reinvestment

The act of a company using its profits to invest back into its own operations, projects, or assets to support growth, improve products or services, and enhance shareholder value.