Question

The trail balance for LB corp has the following balances in selected accounts on December 31, 2019. Accounts Receivable $0 0 6,650 0 Accumulated Depreciation - Equipment Equipment Interest Payable Notes Payable Prepaid Insurance Salaries and Wages Payable Supplies Unearned Service Revenue 20,000 2,220 0 2,940 30,000 All of the accounts have normal balances. The information below has been gathered at December 31, 2019. Prepare the adjusting entry: 2. LB Corp. borrowed $20,000 by signing a 10%, one-year note on July 1, 2019.

Answer 1

2.

Note payable = $20,000

Interest rate = 10%

Date of note issue = July 1, 2019

Interest payable on December 31, 2019 = note payable x interest rate x 6/12

= 20,000 x 10% x 6/12

= $1,000

the following journal adjusting entry will be made on December 31, 2019 :

Date	General Journal	Debit	Credit
December 31, 2019	Interest expense	$1,000
	Interest payable		$1,000
	( To record interest expense)

Kindly comment if you need further assistance. Thanks‼!