Answer:
1.
July 1, 2021
Dr Cash $17,500
Cr Note Payable $17,500
(Borrowed from Falcon company for a 12% note)
2.Dr Interest expense $6,300
Cr Interest payable$6,300
3.The balance of interest expense and interest payable on Dec 31 2021 is $6,300
Explanation:
1.Journal entries
July 1, 2021
Dr Cash $17,500
Cr Note Payable $17,500
(Borrowed from Falcon company for a 12% note)
2.Dr Interest expense $6,300
Cr Interest payable$6,300
3.The balance of interest expense and interest payable on Dec 31 2021 is $6,300
On December 31 2021 Interest expenses has accrued 6% July to December 30
Interest for month is equal $17,500×1%=$175
For 6 months =$1,050×6=$6,300
Thus $6,300 of interest expense should be recognized.
