The journal entry to record accrued interest on a short-term note payable must include a debit to:
A)Interest Expense and a credit to Notes Payable.
B)Interest Expense and a credit to Interest Payable.
C)Interest Payable and a credit to Interest Expense.
D)Interest Payable and a credit to Notes Payable.

Question

Quizplus · Accepted Answer

The journal entry to record accrued interest on a short-term note payable should include a debit to Interest Expense to recognize the expense in the current period and a credit to Interest Payable to recognize the liability. The Notes Payable account is not affected at this point, so option A and D can be eliminated. Option C is incorrect because it suggests crediting Interest Expense, which is a contra account to Interest Payable. Therefore, the correct answer is B.

The Journal Entry to Record Accrued Interest on a Short-Term