Bridgewater Company paid $450 in interest on a loan. $300 of the interest had been accrued in a prior accounting period. Which of the following journal entries correctly records this transaction?

Question

Quizplus · Accepted Answer

The $450 payment would be recorded as a credit to cash. The $300 that had been accrued reduces interest payable (a debit) and the remaining $150 would be recorded as a debit to interest expense.

Bridgewater Company Paid $450 in Interest on a Loan