Question

Brief Exercise 3-12 Record the adjusting entry for interest payable (LO3–3) Midshipmen Company borrows $17,000 from Falcon Company on July 1, 2021. Midshipmen repays the amount borrowed and pays interest of 12% (1%/month) on June 30, 2022. Required: 1&2. Record the necessary entries in the Journal Entry Worksheet below. 3. Calculate the 2021 year-end adjusted balances of Interest Payable and Interest Expense (assuming the balance of Interest Payable at the beginning of the year is $0).

Answer 1

Calculate the 2021 year-end adjusted balances of Interest Payable and Interest Expense.

July 1 2021

Db Cash ________________________ 17000

Cr Borrow payable______________________________ 17000

December 31 2021

Db Interest expense______________ 1020

Cr Interest payable_______________________________ 1020

June 30 2022

Db Interest expense______________ 1020

Cr Interest payable_______________________________ 1020

Step-by-step explanation:

Borrow Loan__%I__ Int.___Amount

July 1 2021 to December 31 2021 17000 6% 1020__18020

July 1 2021

1

Db Cash ________________________ 17000

Cr Borrow payable______________________________ 17000

December 31 2021

Db Interest expense______________ 1020

Cr Interest payable_______________________________ 1020

June 30 2022

Db Interest expense______________ 1020

Cr Interest payable_______________________________ 1020