Interest that has accrued during the accounting period on a note payable to the bank calls for an adjusting entry consisting of:

Question

Quizplus · Accepted Answer

The interest that has accrued on a note payable to the bank needs to be recognized as an expense in the accounting period. Therefore, we need to debit the Interest Expense account and credit the Interest Payable account. As interest has not yet been paid, we do not need to debit the Cash account. Also, we do not need to make any entry related to Notes Payable as the note has not been paid yet.

Interest That Has Accrued During the Accounting Period on a Note