Manhattan Company recorded an adjusting entry to accrue interest owed of $1300 as of December 31,...
Manhattan Company recorded an adjusting entry to accrue interest owed of $1300 as of December 31, Year 1. When the related note was paid during Year 2, the company paid $2450 in interest. Which of the following journal entries correctly records this Year 2 transaction? (Assume that the entry to record the payment of the note itself was recorded in a separate journal entry.)
Select one:
a.
| Interest expense | 1150 | |
| Interest payable | 1300 | |
| Cash | 2450 |
b.
| Interest expense | 1150 | |
| Cash | 1150 |
c.
| Interest expense | 2450 | |
| Cash | 1300 | |
| Interest payable | 1150 |
d.
| Interest expense | 2450 | |
| Cash | 2450 |
Homework Answers
OPTION - A.
| Particular | Debit | Credit |
| Interest Expense ($2,450 - 1300) | $1,150 | |
| Interest Payable | $1,300 | |
| Cash | $2,450 |
(Being interest expense and interest for previous year has been paid during the Year 2)
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