Question

Which transaction or event required the journal entry: debit Interest expense for $250 and credit Interest payable for $250

Answer 1

Loan or loan note with a specific interest rate

Step-by-step explanation:

When the firm has taken a loan from the bank or issued loan notes which have the specific interest rate or coupon rate respectively paid in arrears. The interest expense will accrue each year with the entry by debiting the interest expense and crediting the interest payable and when the interest will be paid the entry will be credit cash and debit interest payable.