Accrued Interest Expense

Accrued interest expense will generally occur anytime a company owes a note payable. The reason for this is that interest is generally paid on the same date that the note itself is paid. The likelihood that that date will coincide with the last day of the year is slim.

Scenario:
Mythical owes $50,000 on a 90 day note payable. The note was signed on November 1, 2003. The interest rate is 12%. Remember, we use 30 day months and a 360 day year for interest computation purposes in accounting classes.

The credit side of an accrued expense will be to what type of account?
Enter as one word - lower case  

How many months of interest expense need to be accrued?

How much interest expense needs to be accrued?
Enter your answer as $x,xxx

What account would you credit in your journal entry?
Enter your answer as two words - lower case