**Problem Context:**On August 1, Year 1, Bellisa Company issued a $36,000 7%, 5-year note to Citizens Bank. Which of the following entries reflects the adjustment required as of December 31, Year 1?**Multiple Choice Options:**1. **Option 1:** - Interest Payable: $2,520 - Interest Expense: $2,5202. **Option 2:** - Interest Expense: $1,050 - Notes Payable: $1,0503. **Option 3:** - Interest Expense: $2,520 - Interest Payable: $2,5204. **Option 4:** - Interest Expense: $1,050 - Interest Payable: $1,050**Explanation:**The problem asks for the adjustment reflecting the interest accrued on a $36,000 note with a 7% annual interest rate from the issuance date (August 1) to the end of the year (December 31).To calculate the interest for this period:1. Determine the annual interest: $36,000 * 7% = $2,5202. Find the interest for 5 months (August 1 to December 31 is 5 months): $2,520 / 12 months * 5 months = $1,050**Correct Answer:** Option 4 reflects the required adjustment, which is:- Interest Expense: $1,050- Interest Payable: $1,050

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On August 1, Year 1, Bellisa Company issued a $36,000 7%, 5-year note to Citizens Bank. Which of the following entries reflects the adjustment required as of December 31, Year 1? Multiple Choice Interest Payable Interest Expense Interest Expense Notes Payable Interest Expense Interest Payable Interest Expense Interest Payable 2,520 1,050 2,520 1,050 2,520 1,050 2,520 1,050

On August 1, Year 1, Bellisa Company issued a $36,000 7%, 5-year note to Citizens Bank. Which of the following entries reflects the adjustment required as of December 31, Year 1? Multiple Choice Interest Payable Interest Expense Interest Expense Notes Payable Interest Expense Interest Payable Interest Expense Interest Payable 2,520 1,050 2,520 1,050 2,520 1,050 2,520 1,050

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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