On the first day of January, Patricia borrowed $2,000 on a one-year note payable bearing interest at 4% per year. The note specifies that principal and interest must be paid in full at the end of the one-year period. On June 30, the adjusted trial balance will show Interest Payable of:
A)$40 credit.
B)$40 debit.
C)$80 credit.
D)$80 debit.

Question

Quizplus · Accepted Answer

Interest for six months is calculated as $2,000 * 4% * (6/12) = $40, which is recorded as a credit to Interest Payable.

On the First Day of January, Patricia Borrowed $2,000 on a One-Year