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18 April, 20:47

JacksonJackson Bank lends JabbourJabbour Clothing Company $125 comma 000125,000 on September 1. JabbourJabbour signs a $125 comma 000125,000 , 6%, six-month note. The journal entry made by JabbourJabbour on December 31, its fiscal year-end, is

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  1. 18 April, 22:17
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    The journal entry is shown below:

    Interest expense A/c Dr $3,000

    To Interest payable A/c $3,000

    (Being interest is recorded)

    The computation of the interest expense is shown below:

    = Principal * rate of interest * number of months : total number of months in a year

    = $125,000 * 6% * (4 months : 12 months)

    = $2,500

    The four-month is calculated from the September 1 to December 31
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