I am doing a bank reconciliation and I need to do make a journal entry for the following transaction.
Interest Payment (Interest only) on Bank Line of Credit $ xxx (Auto-charge, Monthly Recurring Charge until paid in full)
Can I just do
1) Dr. Interest Expense & Cr. Checking Account?
or
2) Dr. Interest Expense
Cr. Interest Payable
Dr. Interest Payable
Cr. Checking Account
Can anyone explain the difference between 1 and 2? Thank you.
Interest Payment (Interest only) on Bank Line of Credit $ xxx (Auto-charge, Monthly Recurring Charge until paid in full)
Can I just do
1) Dr. Interest Expense & Cr. Checking Account?
or
2) Dr. Interest Expense
Cr. Interest Payable
Dr. Interest Payable
Cr. Checking Account
Can anyone explain the difference between 1 and 2? Thank you.