A company borrows $5,000 on November 1, 2019, giving a 10%, 180-day note payable. The adjusting entry on December 31, 2019, would include a:
A)credit to Interest Payable for $82.19.
B)credit to Interest Payable for $123.29.
C)credit to Interest Expense for $82.19.
D)credit to Cash for $82.19.

Question

Quizplus · Accepted Answer

The interest for two months (November and December) on a $5,000 loan at 10% annual interest is calculated as follows: $5,000 * 10% * (60/360) = $83.33 (rounded). The closest option to this calculation is A) credit to Interest Payable for $82.19, indicating a slight rounding difference in the calculation presented in the question.

A Company Borrows $5,000 on November 1, 2019, Giving a 10