Question

Four-Nine Corporation issued bonds that pay interest every January 1. The entry to accrue bond interest at December 31 includes a:_____.
a. credit to Interest Expense.

b. credit to Interest Payable.

c. debit to Interest Payable.

d. credit to Cash.

Answer 1

Answer:

b. credit to Interest Payable.

Explanation:

Since the interest has been accrued but not yet paid, it has to be recognized as an increase in expenses and liabilities. The entry would be a debit to Interest Expense and a credit to Interest Payable.