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    Julia80's Avatar
    Julia80 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    May 20, 2008, 02:49 PM
    Journal Entry for Interest
    How do I enter this transaction in the journal?

    A company paid $4,500 in interest: $500 incurred in January, 2005, and $4,000 to cover the amount owed as of 12/31/2004.

    I think my answer is wrong. I have...

    DR: Interest Expense $500
    DR: Interest Payable $4000
    ... CR: Cash $4500

    Thanks.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
    		  
    #2

    May 22, 2008, 09:17 PM
    Actually, you're answer is correct. :-)

    Any particular reason you're questioning it, or just typical second guessing yourself?
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