The Appleton Company Borrowed $100,000 on May 1,2014

The Appleton Company borrowed $100,000 on May 1,2014.The note,which is due on May 31,2015,included interest at 12%.The note is due on April 30,2015.The company's fiscal year ends on May 31.The company recorded an adjusting entry to recognize $1,000 of interest expense for the year ended May 31,2014.Appleton paid the note and interest owed on April 30,2015.How would the company record this transaction?

A) Debit Notes Payable for $100,000,debit Interest Expense for $12,000,and credit Cash for $112,000.
B) Debit Notes Payable for $100,000,debit Interest Expense for $11,000,debit Interest Payable for $1,000,and credit Cash for $112,000.
C) Debit Interest Expense for $1,000 and credit Interest Payable for $1,000.
D) Debit Notes Payable for $112,000 and credit Cash for $112,000.
E) Debit Cash for $112,000 and credit Notes Payable for $112,000.

Correct Answer:

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