Question

trent restaurant borrowed $110,000 on october 1 by signing a note payable to hometown bank. the interest expense for each month is $825. the loan agreement requires trent to pay interest on january 2 for october, november and december. make the adjusting entry to accrue monthly interest expense for december. date accounts and explanation debit credit december 31 interest expense 825 interest payable 825 to accrue interest for december. 2. post all three entries to the interest payable account and calculate the ending balance as of december 31. interest payable october 31 825 november 30 825 december 31 825 balance 2,475 3. record the payment of three months interest on january 2. (record debits first, then credits. select the explanation on the last line of the journal - entry table.) date accounts and explanation debit credit

Explanation:

Step1: Identify accounts for payment entry

On January 2, when paying the interest, we debit Interest Payable (to reduce the liability) and credit Cash (as cash is being paid out).

Step2: Determine amounts

The total interest for three - months is $825\times3 = 2475$. So, we debit Interest Payable for $2475$ and credit Cash for $2475$.

Answer:

Date	Accounts and Explanation	Debit	Credit
	Cash		2475
	To pay three - months' accrued interest