On 1 October, Simon's Solar Service borrows $150,000 from Statewide Bank on a 3 month, 4% note.
-What accrual entry must Simon's Solar Service make on 31 December before financial statements are prepared?

Question

Quizplus · Accepted Answer

The interest liability to Statewide Bank must be recognised by a debit to interest expense and a credit to interest payable. The amount of the entry is $1,500 (($150,000 x 4%) x 3/12).

On 1 October, Simon's Solar Service Borrows $150,000 from Statewide