Answer:
7% interest at Cec-31 for 6 months:
Dr Interest expense(7%*$2,970,000*6/12) $ 103,950
Cr Interest payable $103,950
9% interest at Sept 30 for 3 months:
Dr Interest expense(9%*$2,970,000*3/12) $66,825
Cr Interest payable $66,825
6% interest at Oct 31 for 4 months:
Dr Interest expense(6%*$2,970,000*4/12) $ 59,400
Cr Interest payable $59,400
8% interest at Jan 31 for 7 months:
Dr Interest expense(8%*$2,970,000*7/12) $138,600
Cr Interest payable $ 138,600
Explanation:
The rationale for debiting interest expense is that is an expense account and increase in expense is normally debited to expense account while interest payable account is credited as the interest obligations are yet discharged by a way of paying cash to investors
