Question

Sloan Company borrowed $8,000 on a line of credit on December 1, 2020. Simple interest of...

Sloan Company borrowed $8,000 on a line of credit on December 1, 2020. Simple interest of 12% will be charged and no payment is required for 60 days. On December 31 the following adjusting entry was made:

Interest Expense 80

Interest Payable 80

No reversing entry was prepared or posted. Sloan received a minimum payment bill from the bank for $160 due on January 30, 2021, which represents only an interest charge. Sloan makes a $500 payment on January 30. Enter the January 30 journal entry below:

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Answer #1
Account Titles Debit Credit
Interest Expense $                80
Interest Payable $                80
Notes Payable $              340
       Cash $              500
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