Answer:
How much interest expense, if any, would Kieso report at the end of its last fiscal year and at the end of its current fiscal year?
- at the end of the last fiscal year Kieso must report $5,100 in interest expense
- at the end of the current fiscal year Kieso must report $25,500 in interest expense
Explanation:
Assuming that Kieso borrowed the money on November 30, the journal entry should be:
Dr Cash 680,000
Cr Notes payable 680,000
On December 31, an adjusting journal entry to record accrued interests must be made:
Dr Interest expense 5,100
Cr Interest payable 5,100
When Kieso paid back the debt on April 30, the journal entry should be:
Dr Notes payable 680,000
Dr Interest payable 5,100
Dr Interest expense 25,500
Cr Cash 710,600
