Justin Company signed a $90,000, three-month, 9% note payable, on December 1. If the accounting period ends on December 31, the entry made at the time of the note's maturity will include:
A) A decrease to Interest Payable for $1,350
B) An increase to Interest Expense for $2,025
C) An increase to Interest Expense for $675
D) An increase to Interest Expense for $1,350

Question

Quizplus · Accepted Answer

Interest Expense = Principal x Rate x Time= $90,000 x 9% x 3/12= $2,025

Justin Company Signed a $90,000, Three-Month, 9% Note Payable, on December