On August 1,Year 1,Bellisa Company issued a $10,000 6%,1-year note to Citizens Bank.Which of the following entries reflects the adjustment required as of December 31,Year 1?

Question

Quizplus · Accepted Answer

Five months have passed (August through December).
Interest owed = $10,000 × 0.06 × 5 ÷ 12 = $250
The adjusting entry will include a debit to Interest Expense (to increase that expense account)and a credit to Interest Payable (to increase that liability account)for $250.

On August 1,Year 1,Bellisa Company Issued a $10,000 6%,1-Year Note