A company issues a $25,000 three-year note. The stated rate and effective rate were both 2%. Which journal entry should be used to record the issuance of the ling term note payable?

• Debit Notes payable for $23,500; Credit Cash for $23,500
• Debit Notes payable for $25,000; Credit Cash for $25,000
• Debit Cash for $25,000; Credit Notes Payable $25,000
• Debit Cash for $23,500; Credit Notes Payable $23,500

A Company issues a $25,000 three-year note on the first day of the year. The stated and effective rates are both 2%. Which journal entry should be used to record interest expense at the end of Year 1?

• Debit interest Receivable for $500; Credit Cash for $500
• Debit Cash for $500; Credit interest Receivable for $500
• Debit interest Expense for $500; Credit Cash for $500
• Debit Cash for $500; Credit interest expense for $500

Answer rating: 100% (QA)

Part 1 Face value of note 25000 Since stated rate and effective rate are sa... View the full answer