Question

On 6/1/21, the company, XYZ, borrowed 100,000 from a bank @ 6% interest for a 100,000 x 67=6,000 / 500 per month month note (interest is stated as annual percentage rate unless otherwise noted) 61/21 cash 1.) If no adjusting entries were recorded by XYZ during the year the adjusting entry on 12/31/21 is: interest payuble if the company fails to make an adjusting entry, the impact on the accounting equation is: 2.) Record the payment on 2/28/22 if XYZ makes reversing entries. 3.)Record the payment on 2/28/22 if XYZ doesn't make reversing entries. 4.)If no adjusting entries were recorded by KBank during the year the adjusting entry on 12/31/21 is: if the company fails to make an adjusting entry, the impact on the accounting equation is: 5.) Record the receipt on 2/28/22 if Kbank makes reversing entries. 6.) Record thereceipt on 2/28/22 if Kbank doesn't make reversing entries.

Answer 1

Answer to Question: Sub Part 1: Preparation of Adjusting Entry on 12/31/21: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ $ 3,500.00 12/31/21 Interest Expense ($100000 x 6% x 7/12) Interest Payable (To record adjusting entry for Interest Expense) $ 3,500.00 If the Company fails to make Adjusting Entry, the impact on the accounting equation is Equity is Overstated by $3500 Liabilities are Understated by $3500

Sub Part 2: Recording the Payment on 2/28/22 if XYZ makes Reversing Entries: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ $ $ 4,500.00 100,000.00 2/28/22 Interest Expense ($100000 x 6% x 9/12) Notes Payable Cash (To record payment of Note payable along with interest) 104,500.00 Sub Part 3: Recording the Payment on 2/28/22 if XYZ doesn't makes Reversing Entries: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ A A A 1,000.00 3,500.00 100,000.00 2/28/22 Interest Expense ($100000 x 6%x2/12) Interest Payable ($100000 x 6% x 7/12) Notes Payable Cash (To record payment of Note payable along with interest) $ 104,500.00

Sub Part 4: If no Adjusting entries were recorded by Kbank during the year, the adjusting entry on 12/31/21: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ $ 3,500.00 $ 3,500.00 Interest Receivable ($100000 x 6% x 7/12) Interest Revenue (To record adjusting entry for earned interest revenue) If the Company fails to make Adjusting Entry, the impact on the accounting equation is Equity is Understated by $3500 Assets are Understated by $3500