JournaldrillAccrued interest on a note
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
On September 1, Copper Kettle Cafe borrowed $24,000 from its bank by signing a one-year, 6% note payable. Principal and all interest are due at the end of the year. Record the interest adjusting entry on December 31.
What this exercise teaches
Interest for four months (September through December) is $24,000 x 6% x 4/12 = $480. Interest Expense is debited and Interest Payable is credited because nothing is paid until the note matures. Notes Payable stays at $24,000 since the principal has not changed.
A hint if you get stuck
Interest builds up with time, so record the cost for the months that have passed and the matching obligation.
This exercise is part of Pro
Pro unlocks all 54 exercises, with worked solutions and progress saved to your account. The free exercises work without an account.
You create a free account first, so Pro is attached to it.
Monthly is charged today and then every month until you cancel, in one click from your account page. Lifetime is one payment with no renewals. Full refund within 14 days of paying.