(a)(b) (i) borrowing of loan on 1 April 2019.019-2Date2019 Apr 1depends on how much is overdrawn. The limit of overdrawing is an amount agreedThe amount of Bank loan borrowed is fixed. Whereas the amount of overdraftby the bank. For bank loan the business is required to make repayment according toagreed terms with the bank but for overdraft the business can deposit cash into thebank account to reduce the overdraft.Date2019Dec 3131Date2020Jan 1Apr 1Dec 3131ParticularsCash at bankBank loanREQUIRED(ii) interest expense incurred at 31 December 2019, including the closing entry.Narrations are not required. [ParticularsDr $180 000Interest expense (amount incurred for the year)Interest expense payableParticularsIncome summary (to close interest expense account) 6750Interest expenseMurniz Restaurant provided the following information on its interest expense account.Interest expense A/cDr$Interest expense payableCash at bankInterest expense payableIncome summaryCr $180 00090005606750Dr$ Cr$67502810Cr$67506750Bal$6750 Cr2250 Dr2810 Dr0(c) Interpret the entries on the following dates.(i) 1 January 2020On 1 Jan 2020, the business reversed the adjustment made for interest expenseowed in the previous year of $6750.(ii) 1 April 2020On 1 July 2020, the business paid the bank interest of $9000 by cheque.(iii) 31 December 2020, relating to the interest expense payable entry.nts[2]

Interest Expense - The fee a company pays for borrowed money is known as an interest expenditure.…

borrowed is fixed. on how much is overdrawn. The limit of overdrawing is an amo by the bank. For bank loan the business is required to make repayment according to agreed terms with the bank but for overdraft the business can deposit cash into the bank account to reduce the overdraft. (b) (i) borrowing of loan on 1 April 2019 2 e 9 Apr 1 Date Particulars Cash at bank Bank loan Dr $ 180 000 Cr $ 180 000 (ii) interest expense incurred at 31 December 2019, including the closing entry. Narrations are not required. [ Dr$ Cr$

borrowed is fixed. on how much is overdrawn. The limit of overdrawing is an amo by the bank. For bank loan the business is required to make repayment according to agreed terms with the bank but for overdraft the business can deposit cash into the bank account to reduce the overdraft. (b) (i) borrowing of loan on 1 April 2019 2 e 9 Apr 1 Date Particulars Cash at bank Bank loan Dr $ 180 000 Cr $ 180 000 (ii) interest expense incurred at 31 December 2019, including the closing entry. Narrations are not required. [ Dr$ Cr$

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 15P: Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed...

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Question

(a)
(b) (i) borrowing of loan on 1 April 2019.
019-2
Date
2019 Apr 1
depends on how much is overdrawn. The limit of overdrawing is an amount agreed
The amount of Bank loan borrowed is fixed. Whereas the amount of overdraft
by the bank. For bank loan the business is required to make repayment according to
agreed terms with the bank but for overdraft the business can deposit cash into the
bank account to reduce the overdraft.
Date
2019
Dec 31
31
Date
2020
Jan 1
Apr 1
Dec 31
31
Particulars
Cash at bank
Bank loan
REQUIRED
(ii) interest expense incurred at 31 December 2019, including the closing entry.
Narrations are not required. [
Particulars
Dr $
180 000
Interest expense (amount incurred for the year)
Interest expense payable
Particulars
Income summary (to close interest expense account) 6750
Interest expense
Murniz Restaurant provided the following information on its interest expense account.
Interest expense A/c
Dr
$
Interest expense payable
Cash at bank
Interest expense payable
Income summary
Cr $
180 000
9000
560
6750
Dr$ Cr$
6750
2810
Cr
$
6750
6750
Bal
$
6750 Cr
2250 Dr
2810 Dr
0
(c) Interpret the entries on the following dates.
(i) 1 January 2020
On 1 Jan 2020, the business reversed the adjustment made for interest expense
owed in the previous year of $6750.
(ii) 1 April 2020
On 1 July 2020, the business paid the bank interest of $9000 by cheque.
(iii) 31 December 2020, relating to the interest expense payable entry.
nts
[2]

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