10. Leon\'s Co. (maker of the note) signs and issues a six-month note payable to

Question

10. Leon's Co. (maker of the note) signs and issues a six-month note payable to First International Bank in the amount of $50,000. The note is signed on October 1, and bears interest of6%. What is the adjusting entry to be made on December 31, for the interest expense accrued to that date? A) Debit-Interest Expense $1,500 B) Debit -Interest Expense $750 C) Debit-Interest Expense $1,500 D) Debit - Interest Expense $750 Credit- Interest Payable $1,500 Credit - Notes Payable $750 Credit- Notes Payable $1,500 Credit Interest Payable $750

Explanation / Answer

Interest for 3 months =50000*6/100*3/12=750

journal entry will be( d)

interest dr.750

interest payable cr.750

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