On November 1, 2018, Sandra Company borrowed $200,000 cash on a 1-year, 6% note payable that requires Sandra Company to pay both principal and interest on October 31, 2019. Given no prior adjusting entries have been recorded, the adjusting journal entry on December 31, 2018, Sandra Company's year-end, would include a:.

Credit to Interest Payable of $2,000

Explanation:

Preparation of the adjusting journal entry on December 31, 2018 for Sandra Company's year-end

In a situation where the interest amount has already been accrued but has not yet been paid we going to debit the Interest Expense with amount of $2,000 and credit Interest Payable with the amount of $2,000 which means that

the interest expense amount that has accrued for both the month of November and December 2018 will be calculated as :

Accrued Interest Expense=$200,000 × 0.06 × 2 / 12

Accrued Interest Expense= $2,000

Therefore the the adjusting journal entry on December 31, 2018, Sandra Company's year-end, would include a: CREDIT to Interest Payable of $2,000

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