How would I journalize this transaction Paid interest expens

How would I journalize this transaction?

\"Paid interest expenses on loan payable, $3,800. An \"accrued interest payable\" account already existed at the beginning of the year in relation to this expense and had a credit balance of $900.\"

Thank you

Solution

Since accrued interest is there, it should be debited with the amount ($900) and the balance amount (3,800 – 900 = $2,900) should be recorded as interest expense of the current year.

Journal

Date

Account titles and explanations

P.ref

Debit

Credit

Accrued interest payable

$900

Interest expense

$2,900

Cash

$3,800

To record payment of interest expense