Answer:
August 31, 202x (assuming a 360 day year)
Dr Interest expense 1,750
Cr Interest payable 1,750
Explanation:
The journal entry to record the loan:
July 1 , 202x
Dr Cash 420,000
Cr Notes payable 420,000
The journal entry to record accrued interest on the loan:
August 31, 202x (assuming a 360 day year)
Dr Interest expense 1,750
Cr Interest payable 1,750
Interest expense = $420,000 x 5% x 2/12 = $1,750
