Far Away Inc. borrowed $130,000 on October 1 by signing a note payable to Community Bank. The interest expense for each month is $542. The loan agreement requires Far Away Inc. to pay interest on December 31. 1. Make Far Away Inc.'s adjusting entry to accrue interest expense and interest payable at October 31, at November 30, and at December 31. Date each entry and include its explanation. 2. Post all three entries to the Interest Payable account. 3. Record the payment of three months' interest at December 31. Requirement 1. Make Far Away Inc.'s adjusting entry to accrue interest expense and interest payable at October 31, at November 30, and at December 31. Date each entry and include its explanation. (Record debits first, then
Far Away Inc. borrowed $130,000 on October 1 by signing a note payable to Community Bank. The interest expense for each month is $542. The loan agreement requires Far Away Inc. to pay interest on December 31. 1. Make Far Away Inc.'s adjusting entry to accrue interest expense and interest payable at October 31, at November 30, and at December 31. Date each entry and include its explanation. 2. Post all three entries to the Interest Payable account. 3. Record the payment of three months' interest at December 31. Requirement 1. Make Far Away Inc.'s adjusting entry to accrue interest expense and interest payable at October 31, at November 30, and at December 31. Date each entry and include its explanation. (Record debits first, then
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Far Away Inc. borrowed $130,000 on October 1 by signing a note payable to Community Bank. The interest expense
for each month is $542. The loan agreement requires Far Away Inc. to pay interest on December 31.
1. Make Far Away Inc.'s adjusting entry to accrue interest expense and interest payable at October 31, at
November 30, and at December 31. Date each entry and include its explanation.
2. Post all three entries to the Interest Payable account.
3. Record the payment of three months' interest at December 31.
Requirement 1. Make Far Away Inc.'s adjusting entry to accrue interest expense and interest payable at October 31,
at November 30, and at December 31. Date each entry and include its explanation. (Record debits first, then
credits. Enter explanations on the last line.)
Make the adjusting entry to accrue monthly interest expense for October.
Date
Oct
Journal Entry
Accounts and Explanation
Debit
Credit
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