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LESSON 21-2 Accrued Expenses
4/25/2018 LESSON 21-2 Accrued Expenses
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ANALYZING AN ADJUSTMENT FOR ACCRUED INTEREST EXPENSE
page 622 2 3 1 1. Debit Interest Expense. 2. Credit Interest Payable. 3. Record the adjusting entry. LESSON 21-2
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POSTING AN ADJUSTING ENTRY FOR ACCRUED INTEREST EXPENSE
page 623 1. Post the debit. 2. Post the credit. 1 2 LESSON 21-2
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Closing Entry Close Interest Expense Debit – Income Summary
Credit – Interest Expense Amount in ledger after posting adjusting entry LESSON 21-2
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REVERSING ENTRY FOR ACCRUED INTEREST EXPENSE
page 624 1 2 1. Debit Interest Payable. 2. Credit Interest Expense. LESSON 21-2
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PAYING A NOTE PAYABLE SIGNED IN A PREVIOUS FISCAL PERIOD
page 625 March 1. Paid cash for maturity value of the September 2 note: principal, $10,000.00, plus interest, $600.00; total, $10, Check No. 916. 1 3 2 1. Debit for the principal of the note. 4 2. Debit for the total interest. 3. Credit for the maturity value of the note. 4. Post the amounts in the General columns. LESSON 21-2
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ASSESSMENT QUESTIONS page 627 From an accounting standpoint, why is using a reversing entry for interest expense advisable? To avoid having to remember to check an entry each time a note is paid to determine if interest should be divided. LESSON 21-2
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ASSESSMENT QUESTIONS When do most accountants use reversing entries?
Whenever an adjusting entry creates a balance in an asset or liability account that initially had a zero balance. LESSON 21-2
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