Question

Earned $83 interest on a company bank account during the month of May. No withdrawals were made from this account in May. Find its general entries.

A. Debit: Interest Expense, Credit: Bank
B. Debit: Bank, Credit: Interest Income
C. Debit: Interest Income, Credit: Bank
D. Debit: Bank, Credit: Interest Expense

Answer 1

The correct general entries for the situation described would be: Debit: Bank, Credit: Interest Income.

Step-by-step explanation:

The correct general entries for the situation described would be:

• Debit: Bank
• Credit: Interest Income

This is because the company earned $83 interest, which is considered income for the company. Therefore, it should be recorded as a credit to the Interest Income account. On the other side of the entry, the money was earned from the company's Bank account, so it should be debited to reflect a decrease in the bank's balance.