laughter legal services has incurred $900 of interest expense on a $1,450 interest payment due on january…
laughter legal services has incurred $900 of interest expense on a $1,450 interest payment due on january 15. journalize the subsequent journal entry that laughter legal services will record on january 15.\ndate|accounts and explanation|debit|credit\njanuary 15| | |
Answer
Explanation:
Step1: Identify the accounts involved
The company has an accrued interest expense of $900 and is making a payment of $1,450. The interest payable account was previously credited for the accrued expense. The difference between the payment and the accrued expense is the current - period interest expense.
Step2: Calculate the current - period interest expense
The current - period interest expense is $1,450 - $900=$550.
Step3: Record the journal entry
The interest payable account (a liability) is debited for the amount that was previously accrued ($900), the interest expense account (an expense) is debited for the current - period expense ($550), and the cash account (an asset) is credited for the total payment amount ($1,450).
| Date | Accounts and Explanation | Debit | Credit |
|---|---|---|---|
| January 15 | Interest Payable | $900 | |
| Interest Expense | $550 | ||
| Cash | $1,450 |
Answer:
| Date | Accounts and Explanation | Debit | Credit |
|---|---|---|---|
| January 15 | Interest Payable | $900 | |
| Interest Expense | $550 | ||
| Cash | $1,450 |