Multiple Choice
On March 1, 2015, Vinnie Services issued a 5% long-term notes payable for $15,000. It is payable over a 3-year term in $5,000 annual principal payments on March 1 of each year plus interest, beginning March 1, 2016. Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period. On March 1, 2016:
A) Vinnie must accrue $5,000 of Interest Expense.
B) Vinnie must accrue for the coming $5,000 as current portion of principal payment.
C) Vinnie must pay out $750 of Interest Expense to the note holder.
D) Vinnie will receive $5,000 as an installment payment.
Correct Answer:
Verified
Correct Answer:
Verified
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