On September 1,Sky Mountain Co.borrowed $200,000 on a 6%,9-month note payable to Coast National Bank.Given no previous adjusting entries have been recorded,Sky Mountain's adjusting entry four months later at December 31 would include a:

Question

Quizplus · Accepted Answer

The amount of interest expense that has accrued as of December 31 is computed as follows: $200,000 × 0.06 × 4 / 12 = $4,000.Since interest has accrued but has not yet been paid,Interest Expense must be debited and Interest Payable must be credited for $4,000.