Question

On December 15, Carboy, Inc., borrows $120,000 cash from Third National Bank at 9 percent annual interest. The note is due in 45 days. At December 31, Carboy records any unpaid interest with an adjusting entry. On January 30 of the next year, Carboy pays the principal and interest owed on the bank note.

Answer 1

Interest payable= $120,000 x 9% x 15/360=$450

Interest expense= $120,000 x 9% x 30/360=$900

Cash= $120,000+$450+$900=$121,350

Journal Entries we will pass:

Interest expense (debit)                 $900

Interest payable (debit)                  $450

Notes payable (debit)                     $120,000

Cash (credit)                                                                       $121,350

What is considered interest expense?

A non-operating item that appears on the income statement is interest expense. It stands for the interest due on all borrowings, including bonds, loans, convertible debt, and credit lines. In essence, it is determined by multiplying the interest rate by the debt's outstanding principal.

What is Interest Payable?

The amount of interest expenditure that has accrued to date but has not been paid as of the balance sheet date is represented by the liability account known as Interest Payable on a company's balance sheet. In a nutshell, it shows how much interest is still owed to lenders.

Learn more about interest expense: brainly.com/question/14185533

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