Accounting help Basically, I posted all of the transactions for one month into t
ID: 2420500 • Letter: A
Question
Accounting help
Basically, I posted all of the transactions for one month into the general journal. Underneath these, it says Additional Information. Note Payable Big Bank: Inteest due to Big Bank on the note payable for the month of march is $925. As of March 31, the company owes Big Bank a total of 1525 for interest (600 for february + 925 for march). Interest will be paid to Big Bank in june.
What do I do with this information? Do I post all the entries to the ledger and do my pre closing trial balance before using this info?
Explanation / Answer
Additional information are given so that one passes adjusting entries in respect of transactions that have not been taken care of when preparing the financial statements for the current year. Thus the adjusting entry would be: Interest expense 1525 To Interest Payable It is necessary to give the effect of the adjusting entry in the trial balance so that an adjusted trial balance can be prepared.