Questions 1. Interest on Craig's Notes Payable has been incurred, but not recorded or paid. The interest that has been incurred is calculated as principal multiplied by the interest rate multiplied by the time period ($4,000 x 10% x 1/12=$33.33). Interest Expense of $33.33 must be recorded as an accrued expense and Accounts Payable, a liability, recorded for the amount that Craig is obligated to pay later. So an adjusting entry is needed to bring accounts up to date at December 31. Question 2. Interest on Craig's Loan Payable has been incurred, but not recorded or paid. The interest that has been incurred is calculated as principal multiplied by the interest rate multiplied by the time period ($25,000 x 12% x 1/12=$250.00 must be recorded as accrued expense and Accounts Payable, a liability, recorded for the amount that Craig is obligated to pay later. So an adjusting entry is needed to bring accounts up to date at December 31. Question 3. Craig's Design and Landscaping has earned interest of $7.20 on its Saving account. This interest has been earned, but not recorded or received. Interest Earned of $7.20 needs to be recorded as an accrued revenue and Accounts Receivable, an asset, recorded for the amount that Craig will receive later. So an adjusting entry is needed to bring accounts up to date at December 31.
Questions 1.
Interest on Craig's Notes Payable has been incurred, but not recorded or paid. The interest that has been incurred is calculated as principal multiplied by the interest rate multiplied by the time period ($4,000 x 10% x 1/12=$33.33). Interest Expense of $33.33 must be recorded as an accrued expense and Accounts Payable, a liability, recorded for the amount that Craig is obligated to pay later. So an
Question 2.
Interest on Craig's Loan Payable has been incurred, but not recorded or paid. The interest that has been incurred is calculated as principal multiplied by the interest rate multiplied by the time period ($25,000 x 12% x 1/12=$250.00 must be recorded as accrued expense and Accounts Payable, a liability, recorded for the amount that Craig is obligated to pay later. So an adjusting entry is needed to bring accounts up to date at December 31.
Question 3.
Craig's Design and Landscaping has earned interest of $7.20 on its Saving account. This interest has been earned, but not recorded or received. Interest Earned of $7.20 needs to be recorded as an accrued revenue and Accounts Receivable, an asset, recorded for the amount that Craig will receive later. So an adjusting entry is needed to bring accounts up to date at December 31.
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