Moss County Bank agrees to lend the Pharoah Company $395000 on January 1. Pharoah Company signs a $395000, 6%, 9-month note. The entry made by Pharoah Company on January 1 to record the proceeds and issuance of the note isCash395000 Interest Expense17775 Notes Payable 412775Cash395000 Interest Expense17775 Notes Payable 395000 Interest Payable 17775Cash395000 Notes Payable 395000Interest Expense17775 Cash377225 Notes Payable 395000

The interest chargeable on note does not form a part of journal entry recording the issuance of notes payable. The entry includes the face value of note only.Cash will be debited and notes payable credited by $395,000 to record the issuance of notes payable. Therefore, option (c) is correct

Answered: Moss County Bank agrees to lend the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Moss County Bank agrees to lend the Pharoah Company $395000 on January 1. Pharoah Company signs a $395000, 6%, 9-month note. The entry made by Pharoah Company on January 1 to record the proceeds and issuance of the note is

Cash	395000
Interest Expense	17775
Notes Payable		412775

Cash	395000
Interest Expense	17775
Notes Payable		395000
Interest Payable		17775

Cash	395000
Notes Payable		395000

Interest Expense	17775
Cash	377225
Notes Payable		395000

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