Asked by
Thomas Devine
on Nov 15, 2024
Verified
On September 1, Piano Keys Corp.borrowed $30,000 from their bank, and signed a 5%, 3-month bank loan.Principal and interest are due on December 1.If Piano Keys prepares monthly financial statements, the adjusting entry that it should prepare for interest on September 30 would be
A) debit Interest Expense, $125; credit Interest Payable, $125.
B) debit Interest Expense, $1,500; credit Interest Payable, $1,500.
C) debit Bank Loan Payable, $375; credit Cash, $375.
D) debit Cash, $30,000; credit Bank Loan Payable, $30,000.
Bank Loan
A sum of money lent by a bank to a borrower for a set period at an agreed interest rate.
Interest Expense
The cost incurred by an entity for borrowed funds over a period of time.
Interest Payable
A liability account representing the amount of interest expense that has been incurred but not yet paid.
- Understand thoroughly the nature of accrued expenses and revenues, and the specific ways to adjust for them.
Verified Answer
FU
Learning Objectives
- Understand thoroughly the nature of accrued expenses and revenues, and the specific ways to adjust for them.