Question
On December 1, 2021, ABC Company, borrows $30,000 cash to expand operations. The loan is made by First Bank under a short-term line of credit
On December 1, 2021, ABC Company, borrows $30,000 cash to expand operations. The loan is made by First Bank under a short-term line of credit arrangement. The company signs a six-month, 15% promissory note. Interest is payable at maturity. ABC's year-end is December 31. Required: ABC Company should record which of the following adjusting entries at December 31, 2021? O Dr. Interest expense and Cr. Interest payable, $375 O Dr. Interest expense and Cr. Interest payable, $750 O Dr. Interest expense and Cr. Cash, $375 O Dr. Interest expense and Cr. Cash, $750 What amount of cash will be needed to pay back the note payable plus any accrued interest on June 1, 2022? O $32,250 O $34,500 $33,750 $31,875 In connection with this note, ABC Company should report interest expense in 2022 for the amount of: $1,875 O $4,500 $3,750 $2,250
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