Question

A business borrowed $51,873 on March 1 of the current year by signing a 30 day, 6% interest bearing note. Assuming a 360-day year, when the note is paid on March 31, the entry to record the payment should include a

Answer 1

Debit to interest expenses for $259

Step-by-step explanation:

Entry of Payment

Date Account Title and Explanation Debit Credit

Mar 31. Note Payable $51,873

Interest expenses $259

($51,873 * 6% * 30/360)

Cash $52,132

(TO record payment)