Which of the following journal entries is correct when a company has incurred interest expense but has not yet paid the interest?
A) Interest expense
$ \quad $$ \quad $Operating income
B) Interest expense
$ \quad $$ \quad $Interest payable
C) Interest payable
$ \quad $$ \quad $Interest expense
D) Retained earnings
$ \quad $$ \quad $Interest expense

Question

Which of the following journal entries is correct when a company has incurred interest expense but has not yet paid the interest?
A) Interest expense 
$ \quad $$ \quad $Operating income
B) Interest expense 
$ \quad $$ \quad $Interest payable
C) Interest payable 
$ \quad $$ \quad $Interest expense
D) Retained earnings 
$ \quad $$ \quad $Interest expense

Quizplus · Accepted Answer

When interest expense is incurred but not yet paid, it is recorded as a liability (interest payable) and an expense (interest expense).

Which of the Following Journal Entries Is Correct When a Company