On October 1, Steve's Carpet Service Borrows $350,000 from First

question 207

Short Answer

On October 1, Steve's Carpet Service borrows $350,000 from First National Bank on a 3-month, $350,000, 8% note. What entry must Steve's Carpet Service make on December 31 before financial statements are prepared?
$\begin{array}{lrr} \text { Interest Payable} &7,000\\ \text { Interest Expense } &&7,000\\\\ \text { Interest Expense } &28,000\\ \text { Interest Payable} &&28,000\\\\ \text { Interest Expense } &7,000\\ \text { Interest Payable } &&7,000\\\\\text { Interest Expense} &7,000\\ \text { Notes Payable } &&7,000\\\end{array}$

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Definitions:

Bank Loan Payable

Bank Loan Payable is the amount owed by a borrower to a bank, typically represented as a liability on the borrower's balance sheet.

Posting

The process of recording financial transactions in the accounting books, such as a ledger or journal.