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54 Project #9: Interest Payable Fido's Food Mart Adjusted Trial Balance December 31, 20XX Debits Credits Account Title Cash Accounts Receivable Less: Allowance for Doubtful Accounts Inventory Supplics Prepaid Insurance 52,898 10,250 1,260 20,390 650 320 30,550 12,250 Equipment Vehicle 1,780 Less: Accumulated Depreciation - Equipment and Vehicle 62,128 Accounts Payable Interest Payable 0 275 12,000 42,000 0 134,725 Unearned Revenue (Gift Cards) Bonds Payable (mature 12/31/XX) Common Stock (200 shares @ $210/share, par $210) Retained Earnings Sales Revenue Less: Sales Discount Cost of Goods Sold Operating Expenses Bad Debt Expense Depreciation Expense 40 64,330 34,840 3,260 1,780 160 Insurance Expense Interest Expense Rent Expense Supplies Expense Wages Expense Totals 5,750 1,200 15,500 254,168 254,168 Project #9: Interest Payable In order to finance the opening of the store, Fido's Food Mart issued $12,000 of bonds that pay 10% interest annually. Interest is paid January 31 for interest that accrued during the prior year. Bonds were issued at face value on September 1. Required 1. Calculate the interest payable to the bond holders from September 1 to December 31. 2. Record the adjusting journal entry for the interest payble. Show the balancing effects on the accounting equation Record the adjusting journal entry in two-line format using a debit and a credit. Show T-accounts with beginning balances, transactions, and end balances a. b. c. 3. Prepare a new adjusted trial balance and highlight the accounts and amounts changed. TIME MONEY Formula Interest Principal Rate Time Formula example Principal Annual Rate of Interest Time (One Year) 15,000 8% Time Interest Principal 15,000 15,000 15,000 15,000 15,000 Rate 8% 8% 8% 896 890 1200 One Full Year One-Half Year Quarter Year Two Months One Month 1/2 1/4 1/6 1/12 600 300 200 100