Williams Company borrowed $30,000 from Bank of USA by signing a 6%, 3-month note on September 1. Principal and interest are payable to the bank on December 1.
If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be:
A) Increase Interest Expense, $1,800; Increase Interest Payable, $1,800
B) Increase Interest Expense, $150; Increase Interest Payable, $150
C) Decrease Note Payable, $1,800; Decrease Cash, $1,800
D) Increase Interest Expense, $450; Increase Interest Payable, $450
Correct Answer:
Verified
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