Tate Company purchased equipment on November 1, 2017 and gave a 3-month, 9% note with a face value of $80000. The December 31, 2017 adjusting entry is
| debit Interest Expense and credit Interest Payable, $1200. |
| debit Interest Expense and credit Interest Payable, $7200. |
| debit Interest Expense and credit Cash, $1200. |
| debit Interest Expense and credit Interest Payable, $1800. |
Interest expense to be adjusted for the 2 month period(November 1,2017-December 31,2017)
=$80000*9%*(2/12)
=$1200.Hence the correct option is A.
The journal entry would be :
Interest expense a/c…Dr$1200
To interest payable $1200.
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