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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Refer to the information for Kinsella Seed above. What journal entry should be recorded on December 31, 2019?

a. Debit Interest 5,000; credit Interest Payable 5,000.

b. Debit Interest Payable 5,000; credit Interest Expense 5,000.

c. Debit Interest Receivable 20,000; credit Interest Expense 20,000.

d. No entry is necessary.

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

To indicate:

The correct journal entry to be recorded as on Dec. 31, 2019.

Explanation

As on Dec. 31, 2019 the interest expense shall be accrued and the journal entry for the accrual of the interest expense shall be a...

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