On the first day of January,Maywood Inc.borrowed $2,000 on a one-year note payable bearing interest at 4% per year.The note specifies that principal and interest must be paid in full at the end of the one-year period.On June 30,the adjusted trial balance will show Interest Payable of ________.
A)$40 credit
B)$40 debit
C)$80 credit
D)$80 debit

Question

Quizplus · Accepted Answer

Interest for six months is calculated as $2,000 * 4% * (6/12) = $40, which is recorded as a credit to Interest Payable.

On the First Day of January,Maywood Inc