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30 January, 04:48

Kepler Company borrowed money from a bank by signing a three-year note payable in the amount of $15,000 on July 1, 2018. The note requires Kepler Company to pay interest at an annual rate of 8%. Kepler Company records adjusting entries on December 31. The adjusting entry that Kepler Company should record for accrued interest on December 31, 2018 would include a debit to Interest Expense forA) $640B) $1,200C) $600D) $100E) $3,600

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  1. 30 January, 06:58
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    option (C) $600

    Explanation:

    Given:

    Principle amount = $15,000

    Interest rate = 8%

    Time period = July 1, 2018 to December 31 i. e 6 months = 0.5 years

    Now,

    Interest = Principal * Rate * Time

    or

    Interest = $15,000 * 0.08 * 0.5

    or

    Interest = $600

    Therefore,

    Debit: Interest Expense, $600

    Hence,

    the correct answer is option (C) $600
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