Q 11SE-1 - Horngren'S Financial And Managerial Accounting

Question

Resort Travel borrowed \(33,000 on September 1, 2018, by signing a one-year note payable to State One Bank. Resort’s interest expense on the note payable for the remainder of the fiscal year (September through November) is \)355. Requirements 1. Record the adjusting entry to accrue interest expense at November 30, 2018. 2. Post the adjusting entry to the T-accounts of the two accounts affected by the adjustment.

Step-by-Step Solution

Answer

Adjusting entry is as follows:

Date	Accounts and Explanation	Debit	Credit
November 30, 2018	Interest Expense	$355
	Interest Payable		$355
	To record interest expense

Step-by-Step Solution Step 1: Explanation on Interest Expense

Interest expense refers to the cost of using borrowed funds, that is payable to lender.

Step 2: Explanation on Journal Entry

The interest expense will be recorded by debiting interest expense and crediting interest payable by $355, respectively.