Question

Global​ Enterprises, Inc. signed a oneminusyear $ 42 comma 000 note payable at 9​% interest on April​ 1, 2018. If Global only adjusts its accounts once a year at yearminus​end, how much interest expense was accrued on December​ 31, 2018?​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest whole​ number.)

Answer 1

Answer:

the journal entry will be:

interest expense 2,835 debit

  interest payable      2,835 credit

--to record accrued interest --

Explanation:

April 1st,2018 42,000 promissory note

accrued interest from April 1st to December 31th (9-months)

principal x rate x time

we moth express rate and time on the same metric.

because the rate is annual; time should be expressed at portion of year 9/12

42,000 x 9% (9/12) = 2,835

the journal entry will be:

interest expense 2,835 debit

  interest payable      2,835 credit