On September 1, Starr Guitar Corp, borrowed $24,000 from their bank, and signed a 8%, 3- month bank loan. Principal and interest are due on December 1. If Starr prepares monthly financial statements, the adjusting entry that they should prepare for interest on September 30 would be (a) debit Interest Expense, $160; credit Interest Payable, $160. (b) debit Interest Expense, $1,920; credit Interest Payable, $1,920. (c) debit Bank Loan Payable, $480; credit Cash, $480. (d) debit Cash, $24,000; credit Bank Loan Payable, S24.000.

On September 1, Starr Guitar Corp, borrowed $24,000 from their bank, and signed a 8%, 3- month bank loan. Principal and interest are due on December 1. If Starr prepares monthly financial statements, the adjusting entry that they should prepare for interest on September 30 would be (a) debit Interest Expense, $160; credit Interest Payable, $160. (b) debit Interest Expense, $1,920; credit Interest Payable, $1,920. (c) debit Bank Loan Payable, $480; credit Cash, $480. (d) debit Cash, $24,000; credit Bank Loan Payable, S24.000.

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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