Question

Moss County Bank agrees to lend the Sheridan Company $410000 on January 1. Sheridan Company signs a $410000, 6%, 9-month note. What is the adjusting entry required if Sheridan Company prepares financial statements on June 30?

A	Interest Expense 12300      Cash 12300

B	Interest Payable 12300      Cash 12300

C	Interest Expense 12300      Interest Payable 12300

D	Interest Payable 12300      Interest Expense 12300

Answer 1

Interest expense (410,000*6%*6/12)	$12,300
interest payable		$12,300

hence correct option is (c)

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