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    aahhmm's Avatar
    aahhmm Posts: 11, Reputation: 1
    New Member
     
    #1

    Jul 27, 2010, 02:42 AM
    how to record this adjusting entry
    charge interest of 6% on the note payable extended on
    November 16.The loan plus interest is to be repaid in 24 months. (Assume that half a month
    of interest accrued during November.)
    Note payable 2,000$

    Dr interest expenses 10$
    Cr interest payable 10$
    (2000X 6%/12)
    is this transaction is correct or I have to record a half of the interest or divide by 24 months instead of 12 months
    aahhmm's Avatar
    aahhmm Posts: 11, Reputation: 1
    New Member
     
    #2

    Jul 27, 2010, 02:48 AM
    What is the adjusting entry?
    charge interest of 6% on the note payable extended on
    November 16.The loan plus interest is to be repaid in 24 months. (Assume that half a month
    of interest accrued during November.)
    Note payable 2,000$

    Dr interest expenses 10$
    Cr interest payable 10$
    (2000X 6%/12)
    is this transaction is correct or I have to record a half of the interest or divide by 24 months instead of 12 months
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
     
    #3

    Jul 27, 2010, 04:35 AM
    The interest accrues at $10 per month, but from the given information, there should be a half-month's accrual for November. So as of Dec 31 the JE should record a month and a half ($15) rather than just one month ($10).

    And for future reference, don't double-post a single question. Good luck with your studies.
    aahhmm's Avatar
    aahhmm Posts: 11, Reputation: 1
    New Member
     
    #4

    Jul 27, 2010, 10:59 AM

    Thanks a lot
    aahhmm's Avatar
    aahhmm Posts: 11, Reputation: 1
    New Member
     
    #5

    Jul 27, 2010, 09:45 PM
    how to record this adjusting entry
    charge interest of 6% on the note payable extended on
    November 16.The loan plus interest is to be repaid in 24 months. (Assume that half a month
    of interest accrued during November.)
    Note payable 2,000$
    Interest is calculated at 6% p.a. on the principal of $2,000.
    $2,000 x 6% x 0.5/12 = $5.00
    Dr interest expenses 5$
    Cr interest payable 5$

    in 31 December The note payable
    has a stated interest rate of 6%, and the principal and interest are due on November 16
    the transaction will be
    Dr interest expenses 20$
    Cr interest payable 20$
    is this transaction is right, because the balabce of the interest in December will be 15$
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
     
    #6

    Jul 30, 2010, 01:19 AM

    PLEASE do not post your same question in a bunch of different threads. It's very confusing to those of us who are trying to help you. I'm glad I chose to look at all your posts before answering, cause it's no fun spending a bunch of time answering someone just to discover there's the same question elsewhere that someone else has answered. And you've also re-done the problem but then started a new thread - it's the same problem - post on the same thread.

    I've converged all your threads together to rid us of the confusion.

    If it's $10 per month, why would you double December which is only one month? And how can there be $15 in the payable if you've put $25 into it?
    aahhmm's Avatar
    aahhmm Posts: 11, Reputation: 1
    New Member
     
    #7

    Jul 30, 2010, 08:13 AM
    Sorry for posted the same question in the different bunch but I still confused , the transactions were like this :
    (adjusting) 6% on the note payable extended on
    November 16.The loan plus interest is to be repaid in 24 months. (Assume that half a month
    Of interest accrued during November.)
    Note payable 2,000$
    Dr interest expenses 5$
    Cr interest payable 5$
    Then they gave you the balance in the trial balance of December
    DR interest expenses15$
    CR interest payable 15$
    And then they require from you to do this transaction:
    In 31 December The note payable
    Has a stated interest rate of 6%, and the principal and interest are due on November 16
    I think the entry will be
    DR interest expenses 5$
    CR interest payable 5$
    The balance will be in adjusted trial balance is
    Interest expenses 20$
    Interest payable 20$
    And I apologised for taking too long
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
     
    #8

    Jul 31, 2010, 02:30 AM

    I'm pretty confused over what you're trying to do there. I'm not sure where the $15 is coming from going into December when only $5 has been put in there. The $5 you were doing for November is correct.

    It's December that's the problem. It's $10 per month as established several posts ago. December is a full month, and a month is $10. No reason to double it to $20 and no reason to halve it to $5. It appears that you're trying to do more than is necessary. It's $10 per month and December is one month. November is not relevant to December, so ignore that.

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