Hey, i got a question...

Joined
Jul 30, 2016
Messages
10
Reaction score
0
Country
Malaysia
there is something that i wish to understand based on my pass year paper that i have done last week.
its an adjustments for bank loan given that the bank loan is 150,000 ( 10% p.a.)
"iv . the remainder of the interest on bank loan is still outstanding"
from this statement does it mean that i have to debit interest expenses(P/L) and credit interest payable (B/S)?
Or this is what is consulted from my tutor, she said that when there is an outstanding interest payment, you will pay it immediately, so she said that i only have to record in interest expenses(P/L) and not credit interest payable (B/S), because it has already been paid for but not recorded.
if this is the case, wont there be a double entry involving in this adjustment?
(p/s. this is my first time posting here, so pardon my any mistake)
Yours
 

Triest123

VIP Member
Joined
Feb 12, 2012
Messages
269
Reaction score
51
What is the amount of bank interest shown on the Trial Balance ?
 

Triest123

VIP Member
Joined
Feb 12, 2012
Messages
269
Reaction score
51
there isn't any bank interest given in the trial balance.
You are correct to make a accrual for the bank interest.

Your tutor is right only if a suspense account shown on the trial balance (i.e. forgot to book the interest expense when it was paid)
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top