Question
In: Accounting
On October 1, 2018, your company borrowed $36,000 on a 6%, 12-month note payable to Chase...
On October 1, 2018, your company borrowed $36,000 on a 6%, 12-month note payable to Chase Bank. Prepare the adjusting entry at December 31, 2018 to record interest expense. Which of the following are true concerning the adjusting entry?
Question 41 options:
|
Credit Notes Payable for $38,160 |
|
|
Debit Interest Expense for $540 |
|
|
Credit Cash for $2,160 |
|
|
Debit Interest Expense for $2,160 |
Solutions
Expert Solution
| Date | Accounts and Explanation | Debit ($) | Credit ($) |
| Dec-31-2018 | Interest Expenses A/c [$36,000 x 6.00% x (3 Months/12 Months)] | 540 | |
| To Interest Payable A/c | 540 | ||
| [Entry at December 31, 2018 to record interest expenses for 3 Months] | |||
| Hence, the answer will be "Debit Interest Expense for $540" |
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