Question

Skysong Industries borrows $22000 at 5% annual interest for six months on October 1, 2022. Which is the appropriate entry to accrue interest if Skysong employs a December 31, 2022, fiscal year?

Answer 1

Answer and Explanation:

The journal entry is shown below:

Interest Expense [$22,000 × 5% × 3 ÷ 12] $275

                  To Interest payable $275

[Being accrued interest expense is recorded]

Here interest expense is debited as it increased the expense and credited the interest payable as it also increased the liability