Adjusting Entry Practice Exercise - Accrued Interest Expense Solution

Adjusting Entries Practice Problem
Interest On Notes Payable Solution

Required: Write the adjusting journal entry for the month ended September 30 based on the following information:

The $6,300 note payable was a 120-day, 9% note that is due in 90 days.

Solution: Purpose: To adjust the interest expense and accrue interest payable on the short-term note payable.

Accounts: Balance Sheet: Interest Payable

Income statement: Interest Expense

Calculation: Days during which interest has accrued: ( 120 - 90 ) = 30

Accrued interest = $6,300 x [ 30 / 360 ] x 9% = $47.25

Date Account Titles Debits Credits

Sept. 30 Interest Expense
$47.25

Interest Payable 47.25

To record accurred interest on the note payable.

Previous Entry

Required:	Write the adjusting journal entry for the month ended September 30 based on the following information:
Required:	The $6,300 note payable was a 120-day, 9% note that is due in 90 days.
Solution:	Purpose: To adjust the interest expense and accrue interest payable on the short-term note payable.
	Accounts:	Balance Sheet: Interest Payable
		Income statement: Interest Expense
	Calculation:	Days during which interest has accrued: ( 120 - 90 ) = 30
		Accrued interest = $6,300 x [ 30 / 360 ] x 9% = $47.25

Date	Account Titles	Debits	Credits
Sept. 30	Interest Expense	$47.25
	Interest Payable		47.25
	To record accurred interest on the note payable.