Question

A company borrowed money from a bank by signing a three-month note payable in the amount of $15,000 on December 1. The note requires the company to pay interest at an annual rate of 8%. The company records adjusting entries on December 31. The adjusting entry that the company should record for accrued interest on December 31 would include a debit to interest expense for O $100. O $300. O $1,200 O $900. $160.

Answer 1

The adjusting entry for accrued interest on December 31 would be:

Date	Account and Explanation	Debit($)	Credit($)
December 31	Interest Expenses ($15,000 * 8%*1/12)	100
	Interest Payable		100
	(Recorded the interest expenses)

So accrued interest expenses on December 31 is $100.

So correct answer is option (1) $100