On November 1,2015,New Morning Bakery signed a $200,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2016.New Morning Bakery should record which of the following adjusting entries at December 31,2015?

Question

Quizplus · Accepted Answer

At December 31, 2015, two months have passed since the note was issued. Therefore, the accrued interest for these two months would be $2,000 ($200,000 x 6% x 2/12). The adjusting entry to record this accrued interest is to debit Interest Expense and credit Interest Payable for $2,000. Option A is the only choice that matches this adjustment.

On November 1,2015,New Morning Bakery Signed a $200,000,6%,six-Month Note Payable