On October 1, a business borrows $20,000 at a 9% annual interest rate, with interest to be paid when the loan matures next year. What interest expense should be accrued at December 31 and what is the correct entry?

Question

Answer

Debit Interest Expense $450; Credit Interest Payable $450

Answer

Debit Interest Expense $1,800; Credit Interest Payable $1,800

Answer

Debit Interest Payable $450; Credit Interest Expense $450

Answer

No adjusting entry is needed

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On October 1, a business borrows $20,000 at a 9% annual interest rate, with inte...

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