Answer:
interst expense 1,920 debit
interest payable 1,920 credit
--to record year-end adjustment--
interest expense 1,280 debit
interest payable 1,920 debit
note payable 160,000 debit
cash 163,200 credit
--to record the honor of the note--
Explanation:
principal x rate x time = interest
principal 160,000
rate 8% annual
days from November 7th to December 31th: 54 days
160,000 x 0.08 x 54/360 = <em>1,920 interest expense</em>
at maturity:
160,000 x 0.08 x 90/360 = 3,200
3,200 total interest less 1,920 accrued interest = 1,280
