On september 1, knack company signed a $50,000, 90-day, 5% note payable with central savings bank. what is the journal entry that should be recorded by knack upon maturity of the note? a) debit interest expense $625; credit interest payable $625.
b) debit notes payable $50,000; credit interest revenue $625; credit cash $49,375.
c) debit cash $50,625; credit notes receivable $50,625.
d) debit notes payable $50,625; credit cash $50,625.
e) debit notes payable $50,000; debit interest expense $625; credit cash $50,625.

E) Debit Notes Payable $50,000; debit Interest Expense $625; credit Cash $50,625.

Explanation:

The journal entry to record upon maturity of the note would be

Note Payable A/c Dr $50,000

Interest Expense A/c Dr $625

                    To Cash A/c $50,625

(Being the maturity of the note is recorded)

The interest expense is computed below:

= Principal × rate of interest × number of days ÷ (total number of days in a year)  

= $50,000 × 5% × (90 days ÷ 360 days)

= $625

We assume the total number of days in a year is 360 days

how does that happen,where u steel points

answer; /// blank(1); above; blank(2); less;