On October 1, 2013, you borrow $206,000 at 10% interest for 3 years and record t

Question

On October 1, 2013, you borrow $206,000 at 10% interest for 3 years and record the promissory note. On April 1 and October 1 you are required to make semi annual interest payments to your creditor. On December 31, 2013, your adjusting journal entry should debit and credit what?

On October 1, 2013, you borrow $206,000 at 10% interest for 3 years and record the promissory note. On April 1 and October 1 you are required to make semi annual interest payments to your creditor. On December 31, 2013, your adjusting journal entry should debit and credit what?

Explanation / Answer

Adjusting Journal entry on 31st dec 2013 will be

= 206000x10% =20600x 3/12 = $5150

Interest Epense A/c $5150 To Interest Payable A/c $5150 (Being Interest payable for 3 month from Oct 1 to dec 31st ,2013)

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