On October 1 2016 Pennington Company issued an $800000 10% nine-month interest-bearing note. Assuming interest was accrued in June 30 2017 the entry to record the payment of the note on July 1 2017 will include a:

A) debit to Interest Expense of $20000.
B) credit to Cash of $800000
C) debit to Interest Payable of $60000.
D) debit to Notes Payable of $860000.

Question

Student Erika Flores Mercado · Accepted Answer

Final Answer : C, Explanation :  The entry to record the payment of the note will include a debit to Interest Payable of $60,000, which represents the interest accrued over the nine-month period.

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