Answer:
Dr Interest expense -$21,720
Cr interest Payable - $21,720
Explanation:
Interest
Since it is a short-time loan (3-month), the interest rate will be prorated to 3-month.
Interest expense = $362,000 × .06 × 3/12 = $21,720
Hence, following entries will be recorded :
Dr Interest expense -$21,720
Cr interest Payable - $21,720
For Principal amount Borrowed:
Cr Loan payable $362000
Dr. Bank Account $362000
Upon Settlement :
Dr. Interest Payable $21,720 and Cr Bank Account $21,720
Dr. Loan payable $362000 and Cr Bank Account $362000
