question archive On November 1, a $90,000, 7%, 3-year installment note payable is issued by Delta Company
On November 1, a $90,000, 7%, 3-year installment note payable is issued by Delta Company
Subject:ManagementPrice:2.87 Bought7
On November 1, a $90,000, 7%, 3-year installment note payable is issued by Delta Company. The note requires that $30,000 of principal plus accrued interest be paid at the end of each year on October 30. Delta's journal entry to record the second annual interest payment would include:
A debit to Interest Expense for $6,300.
A debit to Interest Expense for $4,200.
A credit to Cash for $36,300.
A credit to Cash for $30,000.
none of the above
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Answer:
$ 4200
Note Payable Dr $90000/3 =$30000 (First Year of Installment)
Interest Expenses Dr $90000* .07 =$6300
To Cash $ 36300
Note Payable Dr $90000/3 =$30000 (Second Year of Installment)
Interest Expenses Dr $60000* .07 =$4200
To Cash $ 34200
