The adjusting entry at December 31,2018,with respect to this note included:
A)A debit to Interest Expense for $18,000.
B)A credit to Cash for $18,000.
C)A credit to Notes Payable for $18,000.
D)A credit to Interest Expense for $18,000.

Question

Quizplus · Accepted Answer

Interest on a note payable is an expense for the borrower, so it should be recorded as a debit to Interest Expense. This increases the expense account, reflecting the cost of borrowing for the period.

The Adjusting Entry at December 31,2018,with Respect to This Note