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28 December, 21:51

Mama's Pizza Shoppe borrowed $6,200 at 12% interest on May 1, 2021, with principal and interest due on October 31, 2022. The company's fiscal year ends June 30, 2021. What adjusting entry is necessary on June 30, 2021

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  1. 28 December, 23:17
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    The adjusting entry is as follows

    Accrued interest expense Dr $124

    To Interest payable $124

    (Being the accrued interest expense is recorded)

    The computation is shown below:

    = Borrowed amount * interest rate * given months : total number of months in a year

    = $6,200 * 12% * 2 months : 12 months

    = $124
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