The Journal Entry a Company Uses to Record the Issuance

question 11

Multiple Choice

The journal entry a company uses to record the issuance of a discounted note for the purpose of borrowing funds for the business is

• A) debit Cash and Interest Expense; credit Notes Payable
• B) debit Cash and Interest Payable; credit Notes Payable
• C) debit Accounts Payable; credit Notes Payable
• D) debit Notes Payable; credit Cash

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Definitions:

Return

The gain or loss on an investment over a specific period, represented as a percentage of the investment’s cost.

Ordinary Annuity

An annuity where the payment or receipt occurs at the end of each period, such as bonds or leases that make consistent payments.

Interest Rate

The price paid for borrowing money, typically expressed as a percentage rate over a period of time.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return.