Question

Prepare the journal entry to record the accrual of interest and the premium amortization on December 31, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

The journal entry to record the accrual of interest includes:

• Dr. Interest Expense $5,000
• Cr. Interest Payable $5,000

What is an accrual of interest?

This mean the interest which has been incurred for specific date on a loan but has not yet been paid out.

Here, the Accrued interest expense on 12/31/15 is paid on 1/1/16.

Based on the calculation, the  journal entry to record the accrual of interest includes a Debit to Interest Expense for $5,000 and a Credit to Interest Payable for $5,000.

Missing words "On January 1, 2015, Candlestick, Inc. issues $100,000, five-year, 10% bonds at 100 (100% of face value). Assume that interest is payable semiannually on January 1 and July 1."

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