Use this information to answer the following question. The transactions below pertain to Bolivar Company,whose fiscal year ends September 30.
The September 30 adjusting entry,rounded to the nearest dollar,to accrue the interest expense on the note payable is:
A) Interest Expense 329 Cash 329
B) Cash 329 Interest Expense 329
C) Interest Expense 329 Interest Payable 329
D) Interest Expense 329 Notes Payable 329

Question

Use this information to answer the following question. The transactions below pertain to Bolivar Company,whose fiscal year ends September 30.
 The September 30 adjusting entry,rounded to the nearest dollar,to accrue the interest expense on the note payable is:
A) Interest Expense 329 Cash 329 
B) Cash 329 Interest Expense 329 
C) Interest Expense 329 Interest Payable 329 
D) Interest Expense 329 Notes Payable 329

Quizplus · Accepted Answer

To accrue the interest expense on the note payable, the entry should include both Interest Expense and Interest Payable accounts. Option C is the only one that satisfies this requirement. Option A only includes a debit to Interest Expense and a credit to Cash, which does not account for the accrual of the interest. Option B includes a credit to Interest Expense, which is incorrect. Option D only includes a debit to Notes Payable, which also does not account for the accrual of interest. Therefore, option C is the best choice.

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