Question

$370,000, at 9% annual interest, from Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that

Answer 1

Answer and Explanation:

The adjusting entry is shown below:

Interest Expense $2,775

To Interest Payable$2,775

(being interest expense is recorded)

The computation is shown below:

The calculation is

= $370,000 × 9% ÷ 12 months

= $2,775

Here the interest expense is debited as it increased the expenses and credited the interest payable as it also increased the liabilities