Lucky Company obtained a $50,000, one-year, 12 percent bank loan on November 1 of the current year. Interest is payable at the end of the loan term. The company's adjusting entry needed on December 31 is:

Question

Quizplus · Accepted Answer

Interest Expense = ($50,000 x 0.12) x 2/12 = $1,000
Entry December 31:
Interest Expense $1,000
$\quad $ $\quad $ $\quad $ Interest Payable $1,000

Lucky Company Obtained a $50,000, One-Year, 12 Percent Bank Loan