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Question
Taylor Bank lends Guarantee Company $150,000 on January 1. Guarantee Company signs a $150,000, 8%, nine-month note. The journal entry made by Guarantee Company on January 1 for the proceeds and issuance of the note is
a. Interest Expense 12,000
Cash 138,000
Notes Payable 150,000
b. Cash 150,000
Notes Payable 150,000
c. Cash 162,000
Interest Expense 12,000
Notes Payable 150,000
d. Notes Payable 120,000
Interest Payable 7,200
Cash 120,000
Interest Expense 7,200
Answer
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