On January 1, 2017 The Bedford Springs secured a working capital loan in the amo

Question

On January 1, 2017 The Bedford Springs secured a working capital loan in the amount of $250,000. The interest rate on the loan is 9%. The monthly invoice for interest only has not arrived. Based on a 365 day year, what is the journal entry that would be required to record interest expense for January 2017? On January 1, 2017 The Bedford Springs secured a working capital loan in the amount of $250,000. The interest rate on the loan is 9%. The monthly invoice for interest only has not arrived. Based on a 365 day year, what is the journal entry that would be required to record interest expense for January 2017?

Explanation / Answer

Journal entry for interest expenses :

date accounts & explanation debit credit Interest expenses a/c (250000*9%*1/12) 1875       Interest payable a/c 1875 (TO record accured interest)

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