Reference no: EM132634336

Problem 1: Metzger Company borrowed $20,000 from the Second National Bank on September 1, 20X4. The note carries an annual interest rate of 12%, which will be paid once a year on August 31. The company has not recognized any interest expense during 20X4. What is the journal entry necessary to recognize interest expense as of December 31, 20X4?

                   Dr.                                      Cr.

a. Interest Expense 800       Interest Payable 800

b. Interest Expense 800          Notes Payable 800

c. Interest Payable 800        Interest Expense 800

d. Interest Expense 2,400     Interest Payable 2,400

e. Interest Expense 2,400          Notes Payable 2,400