On November 1, Year 1, Pans on Fire, Inc., borrowed $100,000 cash on an 1-year, 6% note payable that requires Pan's on Fire to pay both principal and interest on October 31, Year 2. The last adjusting journal entry was made on December 31, Year 1, its year end. The entry to record the payment on October 31, Year 2 would include a ______.
a. debit to Interest Expense of $6,000
b. credit to Interest Payable of $6,000
c. credit to Cash of $106,000
d. debit to Interest Payable of $1,000
e. credit to Note Payable of $106,000
f. debit to Note Payable of $100,000
g. debit to Interest Expense of $5,000
Ans:
c. credit to Cash of $106,000
d. debit to Interest Payable of $1,000
f. debit to Note Payable of $100,000
g. debit to Interest Expense of $5,000
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