32, Xtrem Inc. borrowed s80,.000 from the bank on l\" November 2017 for three mo

Question

32, Xtrem Inc. borrowed s80,.000 from the bank on l" November 2017 for three months the interest rate was 9%, payable on the first of each month, starting December 1st Corporation has a December 31 year-end The journal entries to interest on December 31" 03) the payment of interest on 2017. The record: (1) the payment of interest on December 1, (2) the acerual of January 1d are: CR Dec-01 Cash Interest revenue 600 Dec-31 Interest receivable Interest revenue Jan-01 Cash Interest receivable CR Dec-01 Interest expense 7200 Cash Dec-31 Interest expense 7200 Interest payable 7200 Jan-01 Interest payable 7200 7200 Dr 720 CR Dec-01 Interest expense Cash 720 Dec-31 Interest expense 720 Interest payable 720 Jan-01 Interest payable 720 Cash 720 Dr CR Dec-01 Interest expense Dec-31 Interest expense Jan-01 Interest payable Cash 600 Interest payable 600 Cash (e) None of the above

Explanation / Answer

d)

Dec 01 Interest expense 600

Cash 600

Dec 31 Interest expense 600

Interest payable 600

Jan 01 Interest Payable 600

Cash 600

Interest payable per month = $80,000 * 9% * 1/12 = $600

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