Reference no: EM132600755

Questions -

Q1. What is the debtor's entry to record a note paid, with interest accrued in the previous year (assume there is a reversing entry)?

A. debit Cash, credit Interest Receivable, credit Notes Receivable, credit Interest Income

B. debit Notes Payable, debit Interest Expense, debit Interest Payable, credit Cash

C. debit Cash, credit Interest Income, credit Notes Receivable

D. debit Notes Payable, debit Interest Expense, credit Cash

Q2. Aaron Company borrows $17,000 by giving the bank its own 8%, 90-day note. The bank discounts the interest. The effective interest rate is:

A. 8%.

B. 7.84%.

C. 8.33%.

D. 8.16%.