Q14Q Midwest Enterprises made the fol... [FREE SOLUTION]

Chapter 3: Q14Q (page 127)

Midwest Enterprises made the following entry on December 31, 2017.
Interest Expense 10,000
Interest Payable 10,000
(To record interest expensedue on loan from Anaheim
National Bank)
What entry would Anaheim National Bank make regarding its outstanding loan to Midwest Enterprises? Explain why this must be the case.

Short Answer

Expert verified

The interest revenue is debited by $10,000 and the interest revenue is credited by $10,000 to record the interest receivable paid.

As the National Bank ought to receive interest on the loan, therefore it is a current asset as well as income.

Step by step solution

Meaning of interest expense

Interest expense is a non-operating expense presented on the income statement. It is considered as the cost undertaken by the business enterprise for the funds borrowed.

Entry made by Anaheim National Bank in association with outstanding loan and explanation for it

Date	Account title and explanation	Debit	Credit
December 31	Interest receivable	10,000
	To Interest revenue		10,000
	(To record accrued interest revenue on loan)

Accrued expenses are obtained from the similar sources as accrued revenues. Actually, an accrued expense on the accounts of acompany is like an accrued revenue to the other.

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

VEDULA ADVERTISING TRIAL BALANCE DECEMBER 31, 2017
	Unadjusted		Adjusted
	Dr.	Cr.	Dr.	Cr.
Cash	\( 11,000		\) 11,000
Accounts Receivable	16,000		19,500
Prepaid Insurance	9,400		6,500
Supplies	3,350		1,790
Equipment	60,000		60,000
Accumulated Depreciation鈥擡quipment		\( 25,000		\) 30,000
Notes Payable		8,000		8,000
Accounts Payable		2,000		2,000
Interest Payable		0		560
Unearned Service Revenue		5,000		3,100
Salaries and Wages Payable		0		820
Common Stock		20,000		20,000
Retained Earnings		5,500		5,500
Dividends	10,000		10,000
Service Revenue		57,600		63,000
Salaries and Wages Expense	9,000		9,820
Insurance Expense			1,560
Interest Expense			560
Depreciation Expense			5,000
Supplies Expense			2,900
Rent Expense	4,350		4,350
	\(123,100	\)123,100	\(132,980	\)132,980

Supplies
Beg. Bal	800	10 鈦� 31	470

Salaries and Wages Expense
10 鈦� 15	800
10 鈦� 31	600

Unearned Service Revenue
10 鈦� 31	400	10 鈦� 20	650

Service Revenue
	10 鈦� 17	2,400
	10 鈦� 31	1,650
	10 鈦� 31	400

91影视

Short Answer

Step by step solution

Meaning of interest expense

Entry made by Anaheim National Bank in association with outstanding loan and explanation for it

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Business Development

Nature of Business

Accounting

Change Management

Business Operations

Financial Performance

Study anywhere. Anytime. Across all devices.