Bison Corp. issues a 5 year 8%, $60,000 note payable on March 1. The terms of the note include monthly blended principal and interest payments of $1,217. The entry to record the second instalment payment will show a:
A) debit to Notes Payable of $822.
B) debit to Cash for $1,217.
C) debit to Interest Expense for $400.
D) credit to Interest Expense for $395.

Question

Quizplus · Accepted Answer

Calculation: $1,217 - ($59,183 × .08/12).