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Self and consulting borrowed $8200 from First Bank on June 1, 2019 and issued a four-month...

Self and consulting borrowed $8200 from First Bank on June 1, 2019 and issued a four-month a note in the note there’s interest at 6%. Based on the information record the adjusting journal entries that must be made on June 30, 2019 the company has a June 30 fiscal year end.
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Answer #1

Solution:

We need to record the Interest Expense related to the borrowing / Notes Payable for 1 month (June 1 to June 30, 2019) since the fiscal year end on June 30.

1 month Interest Expense = Face Value of Notes Payable $8,200 x Interest Rate 6% x 1 / 12 = $41

Adjustment entry would be

Date

Account Titles and Explanation

Debit

Credit

June.30, 2019

Interest Expense

$41

Interest Payable

$41

(Being interest for 1 month is recorded)

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

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