Answer:
The January 30 entry:
Debit Interest Payable $450
Debit Interest expense $900
Debit Bank note Payable $120,000
Credit Cash $121,350
Explanation:
Assuming 1 year interest is 360 day. The amount Interest expense Carboy, Inc. records at December 31, 2019:
($120,000 x 9% x 15)/360 = $450
The adjusting entry:
Debit Interest expense $450
Credit Interest Payable $450
On January 30, 2020, the amount of interest expense from 01 January 2020 to 30 January 2020:
($120,000 x 9% x 30)/360 = $900
Carboy pays the principal and interest owed on the bank note. The entry by Carboy for the payment (maturity) of the note plus interest:
Debit Interest Payable $450
Debit Interest expense $900
Debit Bank note Payable $120,000
Credit Cash $121,350
