Question

On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What amount of interest expense is accrued at December 31 on the note

Answer 1

Answer:

Interest expense $80

Explanation:

the journal entry to record the issuance of the note:

December 1, 202x, note issued in replacement of account payable

Dr Accounts payable 24,000

    Cr Notes payable 24,000

the journal entry to record accrued interests payable is:

December 31, 202x, accrued interests payable

Dr Interest expense 80

    Cr Interests payable 80

Interest expense = $24,000 x 4% x 1/12 = $80