Travis County Bank agrees to lend Brickyard Corporation $200,000 on January 1.Brickyard signs a $200,000,4%,9-month note.Interest is due at maturity on September 30.The company's fiscal year ends June 30 and adjusting entries are recorded at that time only. What journal entry will Brickyard make when paying the interest at maturity?

Question

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Recall that the company records adjusting entries at year-end on June 30.The journal entry to record the payment of the interest at maturity includes a debit to Interest Payable for $4,000 [or Principal of $200,000 × Interest rate of 0.04 × Time of 6 / 12 (January through June)],a debit to Interest Expense for $2,000 [or Principal of $200,000 × Interest rate of 0.04 × Time of 3 / 12 (July through September)],and a credit to Cash for $6,000 [or Principal of $200,000 × Interest rate of 0.04 × Time of 9 / 12 (January through September)].

Travis County Bank Agrees to Lend Brickyard Corporation $200,000 on January