Question

On September 1, a firm purchased equipment for $2,400, signing a

30-day note bearing interest at 10 percent. The entry to record the
payment of the amount at maturity is (Assume 360 days in a year. Do
not calculate interest accrued to date):
(A) Debit Equipment $2,400, Credit Cash $2,400
(B) Debit Notes Payable $2,400, Credit Cash $2,400
(C) Debit Interest Expense $40, Credit Notes Payable $2,400
(D) Debit Cash $2,400, Credit Notes Payable $2,400

Answer 1

The entry to record the payment of the amount at maturity is Debit Cash $2,400, Credit Notes Payable $2,400. Hence, option D is the correct answer.

Step-by-step explanation:

The correct entry to record the payment of the amount at maturity for the 30-day note bearing interest at 10 percent is:

(D) Debit Cash $2,400, Credit Notes Payable $2,400

This entry reflects the payment of the note, where the firm debits the Cash account to signify the cash outflow and credits the Notes Payable account to acknowledge the reduction in the liability. The interest accrued is not considered in this entry, as specified in the question. If interest were to be considered, a separate entry would be necessary to record the interest expense. However, since the question explicitly states not to calculate interest accrued to date, the focus is solely on the principal repayment at maturity.