On September 1, Knack Company Signed a $50,000, 90-Day, 5

Multiple Choice

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 Notes Payable $50,625; credit Cash $50,625.
B) Debit Notes Payable $50,000; debit Interest Expense $625; credit Cash $50,625.
C) Debit Interest Expense $625; credit Interest Payable $625.
D) Debit Notes Payable $50,000; credit Interest Revenue $625; credit Cash $49,375.
E) Debit Cash $50,625; credit Notes Receivable $50,625.