Answer:
The the adjusting entry for accruing interest is:
Debit Interest expense $1,750
Credit Interest Payable $1,750
Explanation:
On December 1, Milton Company borrowed $350,000, at 6% annual interest.
The interest amount Milton Company paid for 1 year = $350,000 x 6% = $21,000
The interest amount Milton Company paid for a month = $21,000/12 = $1,750
On December 31, following 1 month borrowing, Milton made adjusting entry for accruing interest:
Debit Interest expense $1,750
Credit Interest Payable $1,750
