Question

Quick Trips Cheap Inc. borrowed $97,000 on October 1 by signing a note payable to Metro One Bank. The interest expense for each month is $445. The loan agreement requires Quick Trips Cheap Inc. to pay interest on December 31. 1. Make Quick Trips Cheap Inc.'s adjusting entry to accrue interest expense and interest payable at October 31, at November 30, and at December 31. Date each entry and include its explanation. 2. Post all three entries to the Interest Payable account. You need not take the balance of the account at the end of each month. 3. Record the payment of three months' interest at December 31. Requirement 1. Make Quick Trips Cheap Inc.'s adjusting entry to accrue interest expense and interest payable at October 31, at November 30, and at December 31. Date each entry and include its explanation. (Record debits first, then credits. Enter explanations on the last line.) Make the adjusting entry to accrue monthly interest expense for October. Journal Entry Accounts and Explanation Date Debit Credit Oct Make the adjusting entry to accrue monthly interest expense for November Journal Entry Date Accounts and Explanation Debit Credit Nov Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Solution:

Below is the requirement :

Solution 1. Date Credit Debit $445.00 31-Oct Accounts and Explaination Interest expense Interest payable (Interest expense accrued Recorded) $445.00 30-Nov $445.00 Interest expense Interest payable (Interest expense accrued Recorded) $445.00 31-Dec $445.00 Interest expense Interest payable (Interest expense accrued Recorded) $445.00 Solution 2: Interest Payable Debit Date Date 31-Oct 30-Nov 31-Dec End balance Credit $445.00 $445.00 $445.00 $1,335.00 Solution 3: Event Credit Debit $1,335.00 31-Dec Accounts and Explaination Interest payable Cash (Interest paid in Cash recorded) $1,335.00