26. At the beginning of the quarter, your company borrows $20,000 by signing a four-year promissory note that states an annual interest rate of 8% plus principal repayments of S5 ,000 each year Interest is paid at the end of the second and fourth quarters, whereas principal payments are due at the end of each vear. How does this new promissory note affect the current and non-current liability amounts reported or the balance sheet at the end of the first quarter? A) Increase by 5400 Increase by $20,000 R Increase by S1600 Increase by $20,000 C Increase by 35,400 Incrcasc by $20,000 D) Inrease by $5,400 Increase by S15.000 A. Option A B. OptionEB C. Option C D. Option D Travis County Bank agrees to lend Backyard Corporation $200,000 on January 1. Backyard signs a $200,000, 4%, 9-month note. Interest is due at maturity on September 30. 27. What adjusting entry should Backyard make on June 30 before preparing its annual financial A) r Intcrest Expense B) Intcrest Expens C r Intcrest Payable.... D) dr Inerest Payable 4,000 cr Interest Pavable er Cash er Cash. er Interest Expense 4,000 4000 4.000 4,000 4,0004.000 4,000 A. Option A B. Option B C. OptionC D. Option D 28. A company pays $18,000 in interest on notes, consisting of $12,000 interest that acrued during last accounting period and S6,000 of interest accumulated during this accounting period but not previously recorded on the books. The journal entry for the interest payment should: A. debit Interest Expense for $18,000 and credit Cash for $18,000. B. debit Cash for $18,000 and credit Interest Payable for $18,000 C.debit Interest Expense for $6,000, debit Interest Payable $12,000 and credit Cash for $18,000. D. debit Interest Payable for $12,000, debit Accrued Interest $6,000 and credit Cash for $18,000