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Allen Inc. took out a one-year, 8%, $100,000 loan on March 31, 2021. Interest is due...

Allen Inc. took out a one-year, 8%, $100,000 loan on March 31, 2021. Interest is due upon maturity of the loan. What adjusting entry, if any, should Allen Inc. record on December 31, 2021?

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Answer #1

Interest Expenses ( From March 31 to Dec 31 = 9 Months ) :

= 100,000*8%*9/12 = 6,000

adjustment Entry on December 31, 2021

Date General Journal Debit Credit
Dec 31, 2021 Interest expense $ 6,000
Interest Payables $ 6,000
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