Answer:
The adjusting entry for interest at its year-end of December 31:
Debit Interest expense $270
Credit Interest Payable $270
Explanation:
Hurricane lends $9,000 to another company with the rate of interest of 12%.
The amount Interest expense Hurricane has to pay after 1 year:
$9,000 x 12% = $1,080
The amount Interest expense Hurricane records at December 31, 2021:
$1,080/12 x 3 = $270
The adjusting entry for interest at its year-end of December 31:
Debit Interest expense $270
Credit Interest Payable $270
