On October 1, Sam's Painting Service borrows $164000 from National Bank on a 3-month, $164000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?A. Interest Expense 500 Interest Payable 500B. Interest Payable 500 Interest Expense 500C. Interest Expense 2,000 Interest Payable 2,000D. Interest Expense 500 Notes Payable 500

{Debit] Interest expense $1,640

[Credit] Interest payable $1,640

Explanation:

Annual 12 month interest  = $164,000 * 4%  = $6,560

No of months from 1 Oct to 31 Dec = 3 months

Interest expense to be recorded as ‘payable’ for 3 months  = $6,560 * 3 months/12 months  = $6,560 * 0.25 = $1,640

Entry will include:

{Debit] Interest expense $1,640

[Credit] Interest payable $1,640

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.