Question

Kepler Company borrowed money from a bank by signing a three-year note payable in the amount of $15,000 on July 1, 2018. The note requires Kepler Company to pay interest at an annual rate of 8%. Kepler Company records adjusting entries on December 31. The adjusting entry that Kepler Company should record for accrued interest on December 31, 2018 would include a debit to Interest Expense forA) $640B) $1,200C) $600D) $100E) $3,600

Answer 1

option (C) $600

Step-by-step explanation:

Given:

Principle amount = $15,000

Interest rate = 8%

Time period = July 1, 2018 to December 31 i.e 6 months = 0.5 years

Now,

Interest = Principal × Rate × Time

or

Interest = $15,000 × 0.08 × 0.5

or

Interest = $600

Therefore,

Debit: Interest Expense, $600

Hence,

the correct answer is option (C) $600