Question

Given no monthly adjustments were made during the year, the December 31 year-end adjusting entry to record the interest on a $100,000, 12% bond that pays interest annually on November 1 and was sold at par value will include ______.

Answer 1

Answer:

Dr Interest Expense account 10,000

Cr Cash account 10,000

Explanation:

We have to calculate how much interest did the company paid = $100,000 x 10/12 x 12% = $10,000

Then we must record the journal entries

• Dr Interest Expense account 10,000
• Cr Cash account 10,000

Since cash is an asset and it decreases, then it should be credited.

Since interest is an expense and it increases, it should be debited.