Question

Metlock, Inc. borrowed $56000 from the bank signing a 6%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be:______________.

Answer 1

The adjusting entry that the company should make for interest on September 30, would be:

debit Interest Expense, $280

credit Interest Payable, $280

Step-by-step explanation:

Sep 30

debit Interest Expense, $280

credit Interest Payable, $280

(56,000*6%*1/12) one month interest accounted .

Therefore, The adjusting entry that the company should make for interest on September 30, would be:

debit Interest Expense, $280

credit Interest Payable, $280