Answer.
Option A is correct.
A note due for repayment in one year or less is reported as a current liability in the books of the borrower's business. The amount borrowed is recorded by debiting the account that receives value, commonly the cash account or purchases and crediting the notes payable account.
On repayment of the amount borrowed plus interest, the full amount repaid is credited to the cash account, the interest is debited to the interest expense account and the original sum borrowed is debited to the notes payable account.
And in payee books, debit notes receivable and credited to sales Account. And on the date of payment received date, debited to cash account and credited to interest Account and also credited to notes receivable.
And Interest due to date is accrued at the end of each financial period by debiting the interest expense account and crediting the interest payable liability account.
There is always interest on notes payable, which needs to be recorded separately.
Hence all other options are incorrect.
Thank you
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