A. The company has two interest -bearing long-term debt accounts. Twenty-year, 3% Bonds 600,000 2% Notes Payable to Banks 30,000 1) What is the journal entry in order to accrue interest expense? 2) Total interest paid on notes payable and bonds payable amounted to $17,415. 3) Assuming no beginning balance, what is the ending balance of Interest Payable? B. Gilbert Inc. closed a retail store in Miami at a loss of $35,800. The Original cost of building and equipment was $100,000 with a book value of $60,000. What is the journal entry and where should it be reported on the income statement?
Part A
1) What is the journal entry in order to accrue interest expense?
Debit interest expenses $ 18600
Credit interest payable $ 18600
2) Total interest paid on notes payable and bonds payable amounted to $17,415.
Debit interest payable $ 17415
Credit Cash $ 17415
3) Remaining balance
Remaining difference would be the difference between payable and paid, that is 18600-17415 = $ 1185
Part B
Debit Cash A/c (60000-35800) $ 24200
Debit Loss on sale of assets $ 35800
Credit Building and Equipment $ 60000
It should be reported under other income/losses head.
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