Analyzing and Computing Financial Statement Effects of Loan Interest

Huddart Company gave a creditor a 90-day, 8% note payable for $7,200 on December 16.

a. Prepare the journal entry to record the year-end December 31st accounting adjustment Huddart must make.

Description	Debit	Credit
AnswerInterest expenseInterest payable	Answer	Answer
AnswerInterest expenseInterest payable	Answer	Answer

b. Post the journal entries from part a to their respective T-accounts.

Interest Payable
	Answer	Answer

Interest Expense
	Answer	Answer

c. Record the transaction from part a in the financial statement effects template.

Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contr. Captial	+	Earned Capital		Revenue	-	Expenses	=	Net income
To record year-end adjustment.	Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer