Question

Admire County Bank agrees to lend Sheridan Brick Company $594000 on January 1. Sheridan Brick Company signs a $594000, 8%, 9-month note. What entry will Sheridan Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30

Answer 1

Interest Expenses $35,640, Interest payable $35,640

Step-by-step explanation:

Notes payable = $594,000

Months passed till September = 9

Interest on notes accrued for 9 months = (594,000*8%*9/12) = $35,640

Adjusting Entry

Journal Entry Debit Credit

Interest Expenses $35,640

Interest payable $35,640