A bit rusty on journal entries. A company issues an 8% bond at par: Cash 1000 Bonds payable 1000 (balance sheet is balanced) End of Q1, interest due is 8% * $1000 * 1/4 = $20: Interest Expense $20 Accrued Interest Expense $20 The interest expense is reported on the income statement, and the Accrued Interest Expense is recorded as a liability . My question is where is the asset entry to balance the increased liabilty? Dreary
Within Liabilities: Debit Bond interest expense $20 Credit Bond interest payable $20 Next time: ($20 more interest accrues, and you make $40 semi-annual paymer) Debit Bond interest expense $20 Debit Bond interest payable $20 Credit cash $40
Cool, no asset account involved till actual payment. thanks.