Account Question - Adjusting Entry: Midshipmen Company borrows $15,000 from Falcon Co

darkmacer005

New member
Joined
Feb 5, 2017
Messages
3
*Help* Simple Accounting Question - Adjusting Entry

I am currently stuck as to how I set up my adjusting entry.

Information relevant to the question: Midshipmen Company borrows $15,000 from Falcon Company on July 1, 2018. Midshipmen repays the amount borrowed and pays interest of 12% (1%/month) on June 30, 2019.


Question Part 1:

  • Record the lending for Falcon on July 1, 2018.


  • mathhelp1.png
  • The above is my answer (which is correct).
  • However, it is the second part of the question that I am having trouble with: how do I set up the adjusting entry - what two accounts do I use?
  • Question Part 2:
  • Record the adjusting entry for Falcon on December 31, 2018.





mathhelp2.jpg

What I put in red is what was marked incorrect. I am not sure what accounts I am supposed to be using for the adjusting entry. I can only use from the following selection:

Accounts payable
Accounts receivable
Accumulated depreciation
Advertising expense
Buildings
cash
common stock
Deferred revenue
Delivery expense
Depreciation expense
Dividends
Equipment
Income tax expense
Insurance expense
Interest payable
Interest receivable
Interest revenue
Inventory
Land
Legal fees expense
Notes payable
Notes receivable
Prepaid advertising
Prepaid insurance
Prepaid rent
Repairs and maintenance expense
Retained earnings
Salaries expense
Salaries payable
Sales revenue
Service fee expense
Service revenue
Supplies
Supplies expense
Utilities expense
Utilities payable
 

Attachments

Last edited:

darkmacer005

New member
Joined
Feb 5, 2017
Messages
3
make an entry to "interest payable" and to
"interest expense"
But, wouldn't "interest expense" be used as an entry IF this question was in regards to the firm that is BORROWING the money, not lending out? Since this question is being seen through the eyes of the lender, would the first account be "interest receivable" and the second account be "interest revenue, because the first account would be increasing the "asset" side of the accounting equation whereas the second account would be decreasing the "stockholders' equity" side?
Nice eye by the way! I forgot to add "interest expense"
 
Last edited:

darkmacer005

New member
Joined
Feb 5, 2017
Messages
3
Thank you so much for the help! Cheers! :D
 

mmm4444bot

Super Moderator
Staff member
Joined
Oct 6, 2005
Messages
10,250
You're welcome!

(Now we wait for Denis' boilerplate response, with respect to timestamps, heh.)

;)
 

Denis

Senior Member
Joined
Feb 17, 2004
Messages
1,437
I'm confused...
That thread is dated Feb/2017.
2nd post shows "Denis said"; but all my posts disappeared in 2018.

Markbot, are you asking me something related to that?
 

mmm4444bot

Super Moderator
Staff member
Joined
Oct 6, 2005
Messages
10,250
I'm confused...

… Markbot, are you asking me something …
You do seem a bit confused; I didn't ask you anything.

:p
 

Denis

Senior Member
Joined
Feb 17, 2004
Messages
1,437
You're welcome!
(Now we wait for Denis' boilerplate response, with respect to timestamps, heh.)
Sorry...thought that meant a comment on date Feb/17.
 
Top