On September 1,ABC Company borrowed $50,000 on a 6%,9month note payable to XYZ National Bank.Given no previous adjusting entries have been recorded,ABC's adjusting entry four months later at December 31 would include a:
A) debit to Interest Expense of $750.
B) debit to Interest Expense of $1,000.
C) debit to Interest Expense of $3,000.
D) debit to Interest Expense of $2,250.

Question

Quizplus · Accepted Answer

The interest for four months is calculated as $50,000 * 6% * (4/12) = $1,000.

On September 1,ABC Company Borrowed $50,000 on a 6%,9month Note