Question

Assume that Speedo International received $400,000 cash by signing a long-term promissory note. They are required to make cash interest payments on April 30 and October 31 at an annual rate of 6%. Assuming a 12/31 year end.

Required:
What journal entries would be required at December 31?

Answer 1

Dr Interest expense $4,000

Cr Interest payable $4,000

Step-by-step explanation:

Based on the information given the appropiate

journal entries thatwould be required at December 31 will be to DEBIT INTEREST EXPENSE with the amount of$4,000 and CREDIT INTEREST PAYABLE with the amount of $4,000

December 31

Dr Interest expense $4,000

Cr Interest payable $4,000

(6%*$400,000*2/12)