Royal Bank agrees to lend Backyard Corporation $200,000 on January 1. Backyard signs a $200,000, 4%, 9-month note. Interest is due at maturity on September 30. Backyard's year end is March 31 when they post adjusting entries. What journal entry will Backyard make when paying off the note and interest at maturity? Debit notes payable $200,000, interest expense $4,000 and interest payable $2,000; Credit cash $206,000 Debit notes payable $206,000; Credit cash $206,000

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Royal Bank agrees to lend Backyard Corporation $200,000 on January 1.
Backyard signs a $200,000, 4%, 9-month note. Interest is due at maturity on
September 30.
Backyard's year end is March 31 when they post adjusting entries.
What journal entry will Backyard make when paying off the note and interest at
maturity?
Debit notes payable $200,000, interest expense $4,000 and interest
payable $2,000; Credit cash $206,000
Debit notes payable $206,000; Credit cash $206,000
Debit notes payable $200,000 and interest expense $6,000; Credit cash
$206,000
Debit notes payable $200,000, interest expense $2,000 and interest
payable $4,000; Credit cash $206,000
Transcribed Image Text:Royal Bank agrees to lend Backyard Corporation $200,000 on January 1. Backyard signs a $200,000, 4%, 9-month note. Interest is due at maturity on September 30. Backyard's year end is March 31 when they post adjusting entries. What journal entry will Backyard make when paying off the note and interest at maturity? Debit notes payable $200,000, interest expense $4,000 and interest payable $2,000; Credit cash $206,000 Debit notes payable $206,000; Credit cash $206,000 Debit notes payable $200,000 and interest expense $6,000; Credit cash $206,000 Debit notes payable $200,000, interest expense $2,000 and interest payable $4,000; Credit cash $206,000
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