Question

Interest Expense Incurred but Not Paid (Journal Entry)

a. Debit: Interest Expense, Credit: Cash
b. Debit: Interest Expense, Credit: Interest Payable
c. Debit: Cash, Credit: Interest Expense
d. Debit: Interest Payable, Credit: Interest Expense

Answer 1

The correct journal entry for interest expense incurred but not paid is to debit Interest Expense and credit Interest Payable, reflecting an increase in both expenses and liabilities.

Step-by-step explanation:

The correct journal entry to record interest expense that has been incurred but not yet paid is to debit the Interest Expense account and credit the Interest Payable account. This reflects an increase in expenses on the company's income statement due to the cost of borrowing money, as well as an increase in liabilities on the balance sheet, representing the amount of interest owed but not yet paid.