Solved

Holiday Gifts Signs a Three-Month Note Payable to Help Finance  Interest Expense 800 Interest Payable 800\begin{array}{lrr}\text { Interest Expense }& 800 \\\text { Interest Payable } &&800 \\\end{array}

Question 159

Short Answer

Holiday Gifts signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $80000 with annual interest of 6%. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date if no entries have been made previously for the interest? a.  Interest Expense 800 Interest Payable 800\begin{array}{lrr}\text { Interest Expense }& 800 \\\text { Interest Payable } &&800 \\\end{array}

b.  Interest Expense. 1,200 Interest Payable1,200\begin{array}{lrr}\text { Interest Expense. } & 1,200 \\ \text { Interest Payable} &&1,200 \\\end{array}

c.  Interest Expense 800 Cash 800\begin{array}{lrr} \text { Interest Expense } & 800 \\ \text { Cash } &&800 \\\end{array}

d.  Interest Expense 800 Notes Payable800\begin{array}{lrr} \text { Interest Expense } &800\\ \text { Notes Payable} &&800\\\end{array}

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q154: The adjusted trial balance of Old 97

Q155: Accrued expenses are<br>A) paid and recorded in

Q156: A bakery shop makes a large sale

Q157: The time period assumption is often referred

Q158: Helena Corporation issued a one-year 7% $300000

Q160: The trial balances before and after adjustments

Q161: Which of the following reflects the balances

Q162: Accrued revenues are revenues which have been

Q163: The expense recognition principle requires that efforts

Q164: Yakima Co. purchased equipment on May 1