Question

On October 1, 2015, Attra Inc. borrows $200,000 on a three-year note that requires the company to pay 6% interest on March 31 and September 30. On December 31, 2015, the adjusting entry to accrue interest on the note should debit:

A) Interest Expense and credit Interest Payable for $3,000.

B) Interest Payable and credit Interest Expense for $3,000.

C) Interest Expense and credit Cash for $6,000.

D) Interest Expense and credit Interest Payable for $6,000.

Answer

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