2007-02-09 06:11:17 · 5 answers · asked by Winter 2 in Business & Finance ➔ Other - Business & Finance
The first journal entry is what I need help with: Borrowed 60,000 from the bank for operating cash. The note has a 5% interest rate (simple interest) and is to be paid back in 3 years. How would I post this? Also do I recognize the Interest payable now? And, Would the first journal entry be...Cash....60,000 for the debits and Accounts Payable 60,000...Where does interest payable go?
2007-02-09 06:23:03 · update #1
Winter,
The entry for the initial transaction would be:
Debit: Bank / Cash: $60,000
Credit: Loan Payable: $60,000
The interest is not recorded when the money is first borrowed, as it's not owed until some time has passed. If the interest is paid monthly then it should be recorded each month when it is paid. Eg.
Debit: Interest Expense: $250
Credit: Bank / Cash: $250
If the interest isn't paid monthly it still needs to be accrued monthly:
Debit: Interest expense: $250
Credit: Loan Payable: $250
Then when it's paid it would be:
Debit: Loan Payable: Payment amount
Credit: Bank / Cash: Payment amount
Hope that helps!
2007-02-09 08:07:13 · answer #1 · answered by Anonymous · 2⤊ 0⤋
cash a/c dr 60,000
Interest a/c dr 3000
To, Bank 63000
you need to pay the bank / Accounts Payable 63000 including the interest of5%
2007-02-09 14:34:29 · answer #2 · answered by divyaksung m 1 · 0⤊ 0⤋
It always help to put the question in the actual question :)
2007-02-09 14:15:56 · answer #3 · answered by James Dean 5 · 0⤊ 0⤋
what do you need to do?
2007-02-09 14:13:35 · answer #4 · answered by Anonymous · 0⤊ 0⤋
what is it...
2007-02-09 14:16:29 · answer #5 · answered by sammy 5 · 0⤊ 0⤋