Question

JacksonJackson Bank lends JabbourJabbour Clothing Company ​$125 comma 000125,000 on September 1. JabbourJabbour signs a ​$125 comma 000125,000​, ​6%, six-month note. The journal entry made by JabbourJabbour on December​ 31, its fiscal​ year-end, is

Answer 1

Answer:

Explanation:

The journal entry is shown below:

Interest expense A/c Dr $3,000

           To Interest payable A/c $3,000

(Being interest is recorded)

The computation of the interest expense is shown below:

= Principal × rate of interest × number of months ÷ total number of months in a year

= $125,000 × 6% × (4 months ÷ 12 months)

= $2,500

The four-month is calculated from the September 1 to December 31