On the first day of January, Builders, Inc. borrowed $1,000 on a one-year note payable bearing interest at 7% per year. The note specifies that principal and interest must be paid in full at the end of the one-year period. On June 30, the adjusted trial balance will show Interest Payable of ________.

Question

Quizplus · Accepted Answer

Interest for 6 months (January to June) on $1,000 at 7% per year is $35 ($1,000 * 7% * 6/12), which is a liability (credit) as it is owed but not yet paid.

On the First Day of January, Builders, Inc