What is the journal entry that should be recorded by Knack

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Question - 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? (Use 360 days a year.)

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.

Reference no: EM132626929

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