Moon Company purchased equipment on November 1, 2011, by giving its supplier a 12-month, 9 percent note with a face value of $48,000. The December 31, 2011, adjusting entry is

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The note was for 12 months, so one month has passed (from November 1 to December 31). The interest expense can be calculated as follows: $48,000 × 9% × 1/12 = $360. This amount should be accrued with an adjusting entry, increasing Interest Expense and crediting Interest Payable. Therefore, the entry is: debit Interest Expense and credit Interest Payable, $360 ($48,000 × 9% × 1/12). Option B is the only one that includes these accounts and amounts.

Moon Company Purchased Equipment on November 1, 2011, by Giving