Global Enterprises, Inc. signed a oneminusyear $ 42 comma 000 note payable at 9 % interest on April 1, 2018. If Global only adjusts its accounts once a year at yearminus end, how much interest expense was accrued on December 31, 2018? (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.)

Question

Business

Liam Foley

9 August, 17:58

Global Enterprises, Inc. signed a oneminusyear $ 42 comma 000 note payable at 9 % interest on April 1, 2018. If Global only adjusts its accounts once a year at yearminus end, how much interest expense was accrued on December 31, 2018? (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.)

+4

Answers (1)

Know the Answer?

Johnathan Mason · Answer 1

the journal entry will be:

interest expense 2,835 debit

interest payable 2,835 credit

--to record accrued interest - -

Explanation:

April 1st, 2018 42,000 promissory note

accrued interest from April 1st to December 31th (9-months)

principal x rate x time

we moth express rate and time on the same metric.

because the rate is annual; time should be expressed at portion of year 9/12

42,000 x 9% (9/12) = 2,835

the journal entry will be:

interest expense 2,835 debit

interest payable 2,835 credit