Manhattan Company recorded an adjusting entry to accrue interest owed of $700 as of December 31, Year 1. When the related note was paid during Year 2, the company paid $1250 in interest. Which of the following journal entries correctly records this Year 2 transaction? (Assume that the entry to record the payment of the note itself was recorded in a separate journal entry.)
A.
| Interest Expense | 550? | |
| Interest Payable | 700? | |
| Cash | 1250? |
B.
| Interest Expense | 1250? | |
| Cash | 1250? |
C.
| Interest Expense | 550? | |
| Cash | 550? |
D.
| Interest Expense | 1250? | |
| Cash | 700? | |
| Interest Payable | 550? |
Answer: A
Business
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