A company pays $9,000 in interest on notes consisting of $6,000 of interest that was accrued during the last accounting period and $3,000 of interest that accumulated during this accounting period that has not yet been accrued on the books.The journal entry for the interest payment should:
A)debit Interest Expense $9,000 and credit Cash $9,000.
B)debit Cash $9,000 and credit Interest Payable $9,000.
C)debit Interest Expense $3,000,debit Interest Payable $6,000,and credit Cash $9,000.
D)debit Interest Payable $6,000,debit Accrued Interest $3,000,and credit Cash $9,000.

Question

Quizplus · Accepted Answer

The company has already accrued $6,000 of interest but hasn't paid it yet, so it should be debited to Interest Expense. The remaining $3,000 is interest that has accumulated but hasn't been accrued yet, so it should be debited to Interest Payable. Finally, the company paid a total of $9,000, so Cash should be credited for that amount. Therefore, the journal entry should be: debit Interest Expense $6,000, debit Interest Payable $3,000, and credit Cash $9,000.

A Company Pays $9,000 in Interest on Notes Consisting of $6,000