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Accrual Based Accounting Adjusting Journal Entries (AJEs): On August 1 st , 2020, The Androids Dungeon & Baseball Card Shop borrowed $21,000 from the 1
- Accrual Based Accounting Adjusting Journal Entries (AJEs): On August 1st, 2020, The Androids Dungeon & Baseball Card Shop borrowed $21,000 from the 1st Bank of Springfield, signing a note payable. This note is due in 5 years and has a 4% annual interest rate. The firm pays interest annually, every July 31st. The first interest payment is due July 31st, 202
- Record the journal entry The Androids Dungeon would make on August 1st, 2020, when it initially borrows the $21,000 from the bank.
- Record the adjusting entry The Androids Dungeon would make to recognize Interest Expense on December 31st, 2020. Assume The Androids Dungeon uses an annual accounting period which ends on December 31st, 2020 and adjusting entries are only made at the end of the annual accounting period on 12/31 (i.e. assume no adjusting entries have been recorded yet for the year).
- Calculate the adjusted balances of both the Interest Payable account and the Interest Expense account as of 12/31/2020. Assume the balance of the Interest Payable account and the balance of the Interest Expense account as of 8/1/2020 were both $0 and there are no other transactions.
- What if The Androids Dungeon did not make the adjusting entry on 12/31/2020 to recognize Interest Expense? Indicate by how much the year ending 12/31/2020s 1) assets, 2) liabilities, 3) revenues, 4) expenses, 5) net income, 6) retained earnings, and 7) SHE would be either under- or overstated if this adjusting entry were not recorded If no effect, write no effect.
- Record the journal entry The Androids Dungeon would make on July 31st, 2021, when it makes its first annual interest payment to the bank.
- Record the journal entry The Androids Dungeon would make on August 1st, 2020, when it initially borrows the $21,000 from the bank.
- Record the adjusting entry The Androids Dungeon would make to recognize Interest Expense on December 31st, 2020. Assume The Androids Dungeon uses an annual accounting period which ends on December 31st, 2020 and adjusting entries are only made at the end of the annual accounting period on 12/31 (i.e. assume no adjusting entries have been recorded yet for the year).
- Calculate the adjusted balances of both the Interest Payable account and the Interest Expense account as of 12/31/2020. Assume the balance of the Interest Payable account and the balance of the Interest Expense account as of 8/1/2020 were both $0 and there are no other transactions.
- What if The Androids Dungeon did not make the adjusting entry on 12/31/2020 to recognize Interest Expense? Indicate by how much the year ending 12/31/2020s 1) assets, 2) liabilities, 3) revenues, 4) expenses, 5) net income, 6) retained earnings, and 7) SHE would be either under- or overstated if this adjusting entry were not recorded If no effect, write no effect.
- Record the journal entry The Androids Dungeon would make on July 31st, 2021, when it makes its first annual interest payment to the bank.
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