Bigwin Inc had a loan outstanding during the month and at the end of the month it paid interest expense of $200.How would the transaction be recorded?

Question

Quizplus · Accepted Answer

When interest expense is paid on a loan, the transaction would be recorded by debiting the Interest Expense account and crediting the Cash account. Therefore, the correct option is D. Option A would be used to record the payment of a loan, but not specifically for the interest portion. Option B would record the interest expense, but not the actual payment. Option C is the opposite of the correct answer and would result in an incorrect record.

Bigwin Inc Had a Loan Outstanding During the Month and at the End