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Julia80
May 20, 2008, 02:49 PM
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
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?