On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What is the journal entry that should be recorded upon signing the note?
A. Debit Notes Payable $24,000; debit Interest Expense $160; credit Accounts Payable $24,160.
B. Debit Accounts Payable $24,160; credit Notes Payable $24,160.
C. Debit Accounts Receivable $24,000; credit Notes Receivable $24,000.
D. Debit Notes Payable $24,000; debit Interest Expense $160; credit Cash $24,160.
E. Debit Accounts Payable $24,000; credit Notes Payable $24,000.
Answer: E
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