Answer:
Debit Interest expense (p/l) $100
Credit Accrued Interest (B/S) $100
Explanation:
The accrual basis of accounting requires that expenses are recognized in the period incurred and not necessarily the period settled. Irrespective of the time of settlement, the interest expense on note payable at the end of the year will be thus recognized;
Debit Interest expense (p/l) $100
Credit Accrued Interest (B/S) $100
Being entries to recognize interest expense on note payable.
