On October 1,you Borrow $200,000 for 10 Years at 7

question 93

Multiple Choice

On October 1,you borrow $200,000 for 10 years at 7% interest in order to build a new facility.In April and again in October of the following year,you pay half the annual interest to your creditors.The journal entry to record the issuance of the promissory note should:

• A)debit Notes Payable for $200,000,debit Interest Expense for $14,000,credit Cash for $200,000,and credit Interest Payable for $14,000.
• B)debit Accrued Interest for $14,000 and credit Cash for $14,000.
• C)debit Cash for $200,000 and credit Notes Payable for $200,000.
• D)debit Cash for $200,000,debit Interest Expense for $14,000,credit Notes Payable for $200,000,and credit Interest Payable $14,000.

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Definitions:

Simplest

Pertaining to the least complicated or most straightforward version, form, or method of something.

Schedule

A plan that details when certain tasks or activities are to be done, outlining a timeline for events.

Reinforcement

In behavior psychology, it refers to the process of encouraging or establishing a pattern of behavior by offering rewards or consequences.

Intermittent Reinforcement

A conditioning schedule where a response is only sometimes reinforced, leading to more resistant behavior to extinction.