Question
In payment of an open account, Kit-Kat Corporation issued a $6,000, 4%, 3-month note to Ruth Ltd. on July 1. Interest is due at
In payment of an open account, Kit-Kat Corporation issued a $6,000, 4%, 3-month note to Ruth Ltd. on July 1. Interest is due at maturity. On Oct 1, Kit-Kat sent notification to Ruth that Kit-Kat is unable to honour the note at this time and will pay at a later date. The fiscal year end for both companies is December 31. The journal entry recorded by Kit-Kat Corporation on Oct 1 should include: Accounts Payable Notes Payable 6,000 6,000 Notes Payable 6,000 Interest Payable 240 Accounts Payable 6,240 Notes Payable 6,000 Interest Payable 60 Accounts Payable 6,060 Notes Payable 6,000 Accounts Payable 6,000 None of the above
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