On the first day of January,Patricia borrowed $5000 on a one-year loan payable bearing interest at 7% per year.The loan specifies that principal and interest must be paid in full at the end of the one-year period.On 30 June,the adjusted trial balance will show Interest payable of:
A)$175 credit
B)$350 debit
C)$175 debit
D)$350 credit

Question

Quizplus · Accepted Answer

Interest payable is calculated as follows:Interest payable = Principal x Interest rate x TimeInterest payable = $5000 x 7% x 6/12Interest payable = $175Therefore, the correct answer is A) $175 credit.

On the First Day of January,Patricia Borrowed $5000 on a One-Year