The journal entry for accrued interest on a loan payable includes:

Question

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The accrued interest on a loan payable represents the amount of interest that has been incurred but not yet paid. To record this, we need to debit Interest expense (expense account) and credit Interest payable (liability account). This will increase the interest expense and the liability to pay interest. Option B is incorrect because there is no cash involved in this transaction - we are only recording the accrued interest. Option C is incorrect because it suggests that cash has been paid. Option D is incorrect because it does not have a corresponding debit entry.

The Journal Entry for Accrued Interest on a Loan Payable