Question

Current Attempt in Progress The bookkeeper for Ivanhoe Company asks you to prepare the followingaccrual adjusting entries at December 31. Interest on notes paysble of 5430 should be accrued.

Answer 1

The question is about creating an accrual adjusting entry for interest on notes payable. The entry would debit Interest Expense and credit Interest Payable for the accrued amount up to December 31, which in this case is $5,430.

Step-by-step explanation:

The question concerns the preparation of an accrual adjusting entry for interest on notes payable that has been incurred but not yet paid as of December 31. To record this entry, we would debit Interest Expense and credit Interest Payable for the amount of interest that has accrued on the notes payable up to December 31.

This reflects the expense that has been incurred during the period and the corresponding liability that the company owes.

Let's take the interest on notes payable of $5,430 as an example:

• Debit Interest Expense $5,430
• Credit Interest Payable $5,430

This entry recognizes the interest expense that has accumulated over time and is yet to be paid. Properly managing and catching such items, as Noel did with the overpayment issue, is crucial for accurate financial reporting and preventing cash flow problems.