Answered

Westonci.ca is the premier destination for reliable answers to your questions, provided by a community of experts. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

On January 1, Bloomingdale, Inc. borrows $92,000 from First Estate Bank. The loan is due in one year along with 4% interest. The company is preparing its quarterly report for March 31. Which of the following best describes the necessary accrual for interest expense?
a. $3,680 decrease liabilities, decrease cash
b. $3680 increase expenses, decrease cash
c. $ 920 decrease abilities, decrease cash
d. $920 increase abities, increase expenses

Sagot :

Answer:

d. $920 increase liabilities, increase expenses

Explanation:

The journal entry is given below:

On March 31

Interest Expense Dr. $920 ($92,000 × 4% × 3 ÷ 12)

            To Interest Payable $920

(being interest expense is recorded)

Here interest expense is debited as it increased the expense and credited the liabilities as it also increased the liabilities

Therefore the option d is correct

We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.