Question

Brief Exercise 3-12 Record the adjusting entry for interest payable (LO3–3) Midshipmen Company borrows $17,000 from Falcon Company on July 1, 2021. Midshipmen repays the amount borrowed and pays interest of 12% (1%/month) on June 30, 2022. Required: 1&2. Record the necessary entries in the Journal Entry Worksheet below. 3. Calculate the 2021 year-end adjusted balances of Interest Payable and Interest Expense (assuming the balance of Interest Payable at the beginning of the year is $0).

Answer 1

Answer:

Calculate the 2021 year-end adjusted balances of Interest Payable and Interest Expense.

July 1 2021    

   

Db Cash ________________________ 17000    

Cr Borrow payable______________________________  17000        

December 31 2021      

Db Interest expense______________ 1020    

Cr Interest payable_______________________________  1020  

   

June 30 2022          

Db Interest expense______________ 1020    

Cr Interest payable_______________________________  1020  

Explanation:

Borrow                       Loan__%I__ Int.___Amount      

July 1 2021 to December 31 2021  17000 6% 1020__18020

   

July 1 2021    

1    

Db Cash ________________________ 17000    

Cr Borrow payable______________________________  17000  

   

December 31 2021    

   

Db Interest expense______________ 1020    

Cr Interest payable_______________________________  1020  

   

June 30 2022    

   

Db Interest expense______________ 1020    

Cr Interest payable_______________________________  1020