The adjusting entry that would be made at the year-end accruing the interest expense of $100 on a note is:
A) Interest Expense 100
Notes payable 100
B) Interest Payable 100
Interest Expense 100
C) Interest Expense 100
Interest Payable 100
D) Notes payable 100
Interest Expense 100

Question

Quizplus · Accepted Answer

The adjusting entry required to accrue the interest expense of $100 on a note at year-end is to record the interest expense and an equal amount of interest payable. Therefore, option C "Interest Expense 100, Interest Payable 100" is the correct choice. Option A is incorrect because it only records the interest expense, ignoring the corresponding interest payable. Option B is also incorrect because it only recognizes the interest payable and ignores the interest expense. Option D is incorrect because it records interest expense and notes payable, but fails to recognize the corresponding interest payable.

The Adjusting Entry That Would Be Made at the Year-End