Ask Me Help Desk

Ask Me Help Desk (https://www.askmehelpdesk.com/forum.php)
-   Accounting (https://www.askmehelpdesk.com/forumdisplay.php?f=19)
-   -   Journal Entry (https://www.askmehelpdesk.com/showthread.php?t=61046)

  • Feb 7, 2007, 05:54 PM
    KAT4
    Journal Entry
    Can someone please help me with this journal entry:

    Borrowed $15,000 from the bank by issuing a 12-month note. Interest accrues on the note at the rate of 12% annually, or 1% per month. Interest is to be paid when the note is due next year.
  • Feb 7, 2007, 07:41 PM
    KongTheKonqueror
    When receiving cash:
    Dr. Cash 15,000
    Cr. Notes payable 15,000

    Each month to record the interest expense:
    Dr. Interest expense 150
    Cr. Interest payable 150

    When paying back the note:
    Dr. Notes payable 15000
    Dr. Interest payable 1800
    Cr. Cash 16800
  • Feb 8, 2007, 10:00 PM
    CaptainForest
    I agree with Kong.

    Unless you are preparing monthly financial statements, no need to calculate the interest every month though, just when it is time for payment or a financial statement is being released.

  • All times are GMT -7. The time now is 03:15 PM.