1. Refer to the information for Kinsella Seed above. What journal entry should be recorded on December 31, 2019?
a. Debit Interest Expense 5,000; credit Interest Payable 5,000.
b. Debit Interest Payable 5,000; credit Interest Expense 5,000.
c. Debit Interest Receivable 20,000; credit Interest Expense 20,000.
d. No entry is necessary.
2. Refer to the information for Kinsella Seed above. What journal entry should be made with respect to the interest payment on October 1, 2020?
a. Debit Interest Expense 15,000; debit Interest Payable 5,000; credit Cash 20,000.
b. Debit Interest Expense 15,000; credit Cash 15,000.
c. Debit Cash 20,000; credit Interest Expense 15,000; credit Interest Payable 5,000.
d. Debit Interest Expense 20,000; credit Cash 20,000.