Question

Calculator Martinez Co. borrowed $68,400 on March 1 of the current year by signing a 60-day, 12%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to record the payment should include a ______ . Round your answer to the nearest whole dollar. a. debit to Interest Payable for $1,368 b. debit to Interest Expense for $1,368 c. credit to Cash for $68,400 d. credit to Cash for $76,608

Answer 1

Correct Answer: Option B :

Debit to interest Expense for $1,368

Working:

Calculation of interest

A	Amount	$ 68,400.00
B	Interest @12%	$    8,208.00
C =B/360	Interest per day	$          22.80
D = C*60	Interest for 60 days	$    1,368.00

Date	General Journal	Debit	credit
30-April	Notes Payable	$   68,400.00
	Interest Expense	$      1,368.00
	Cash		$        69,768.00
	(To record Payment of Note)

End of Answer:

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