A $900,000 Note Payable Requires 10% Annual Interest with Interest

question 102

Multiple Choice

A $900,000 note payable requires 10% annual interest with interest due monthly on the 15^th of each month.An interest payment of $7,500 was made on April 15 and the next payment is due on May 15.As of April 30,$3,750 of interest expense has accrued.How would the company record the related adjusting entry?

• A)Debit Interest Expense for $3,750 and credit Cash for $3,750.
• B)Debit Interest Expense for $3,750 and credit Interest Payable for $3,750.
• C)Debit Interest Payable for $3,750 and credit Cash for $3,750.
• D)Debit Interest Payable for $3,750 and credit Interest Expense for $3,750.
• E)Debit Interest Expense for $3,750,credit Interest Payable for $3,750 and credit cash for $7,500.

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