Question

Record journal entry: Interest incurred and paid on long-term debt was $153,326. What is the journal entry for this transaction?

Answer 1

The journal entry for interest incurred and paid on long-term debt is a debit to Interest Expense and a credit to Cash/Bank for the amount of $153,326.

Step-by-step explanation:

The journal entry for interest incurred and paid on long-term debt of $153,326 is:

• Debit Interest Expense: $153,326
• Credit Cash/Bank: $153,326

This entry reflects the expense recognized on the income statement for the interest cost and the reduction in cash or bank balance on the balance sheet because the interest was paid. In accounting, when you pay for something, you decrease your asset (Cash/Bank) and recognize the expense (Interest Expense) at the same time.