Question

For the current interest period, Jones Corporation's accountant correctly recognized interest expense of $7,350 relating to Jones' bonds and paid $7,000 in interest to bond holders. The journal entry recording the interest also must have included a _______.

Answer 1

Journal entry recording the interest

Debit Credit

Interest Expense $7,350

Cash $7,000

Interest Payable $350

As $7,000 is paid from the total expense of $7,350. Remaining interest of $350 is recorded as liability in interest payable account.