Project #: Interest Payable 55 In order to finance the opening of the store, Fido's Food Mart issued $12,000 of bonds that pay 1096 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. a. Show the balancing effects on the accounting equation b. Record the adjusting journal entry in two-line format using a debit and a credit. c. Show T-accounts with beginning balances, transactions, and end balances. 3. Prepare a new adjusted trial balance and highlight the accounts and amounts changed. TIME = MONEY Owaiss/Slaterstock.com Formula Interest = Principal X Rate x Time Formula example Principal Annual Rate of Interest Time (One Year) 15,000 8% VNNVVVO Time Interest 1200 One Full Year One-Half Year Quarter Year Two Months One Month 600 Principal 15,000 15,000 15,000 15,000 15,000 Rate 8% 8% 8% 1/2 1/4 300 1/6 8% 1/12 54 Project #9: Interest Payable Cash Fido's Food Mart Adjusted Trial Balance December 31, 20XX Account Title Debits Credits 52,898 Accounts Receivable 10,250 Less: Allowance for Doubtful Accounts 1,260 Inventory 20.390 de 2 Supplies 650 Prepaid Insurance 520 Equipment to 30.550 Vehicle Vehicle 12,250 Less: Accumulated Depreciation - Equipment and Vehicle 1.780 Accounts Payable 62,128 Interest Payable Unearned Revenue (Gift Cards) Bonds Payable (mature 12/31/XX) 12,000 Common Stock (200 shares @ $210/share, par $210) 42,000 Retained Earnings Sales Revenue Less: Sales Discount Cost of Goods Sold 64,330 Operating Expenses 34,840 Bad Debt Expense 3,260 Depreciation Expense 1,780 Insurance Expense 160 Interest Expense Rent Expense 5,750 Supplies Expense 1,200 Wages Expense 15,500 Totals 254,168 254,168 275 134,725 40