Travis County Bank agrees to lend Brickyard Corporation $200,000 on January 1. Brickyard signs a $200,000, 4%, 9-month note. Interest is due at maturity on September 30. The company's fiscal year ends June 30 and adjusting entries are recorded at that time only.
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 2. Use the information above to answer the following question. What adjusting entry should Brickyard make on June 30 before preparing its annual financial statements?
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a. Debit Interest Expense and credit Interest Payable for $4,000
b. Debit Cash and credit Interest Payable for $4,000
c. Debit Cash and credit Interest Expense for $4,000
d. Debit Interest Payable and credit Interest Expense for $4,000
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 3. Use the information above to answer the following question. What journal entry will Brickyard make when paying the interest at maturity?
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a. Debit Notes Payable and credit Cash for $206,000
b. Debit Interest Expense for $4,000, and credit Cash for $4,000
c. Debit Interest Expense for $6,000 and Cash for $206,000
d. Debit Interest Payable for $4,000, debit Interest Expense for $2,000, and credit Cash for $6,000
Answers
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Posted 21 Apr 2017 03:04 AM
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