The adjustment dated 12/31/20x1 to accrue interest to be paid most likely would be reversed by which of the following entries?
A)Debit Interest Payable and credit Interest Expense dated 1/1/20x2
B)Debit Interest Expense and credit Interest Payable dated 12/31/20x1
C)Debit Interest Payable and credit Interest Expense dated 12/31/20x1
D)Debit Interest Expense and credit Interest Payable dated 1/1/20x2

Question

Quizplus · Accepted Answer

Reversing the accrual of interest payable involves debiting the Interest Payable account to decrease it and crediting the Interest Expense account to offset the initial accrual, which is correctly reflected in option A with the reversal dated 1/1/20x2, the day after the accrual date.

The Adjustment Dated 12/31/20x1 to Accrue Interest to Be Paid