Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 24 - No. 49)
What is the correct journal entry for interest expense incurred on a bank loan?
Debit Bank, Credit Interest Expense.
Debit Interest Expense, Credit Bank.
Debit Interest Expense, Credit Loan Payable.
Debit Loan Payable, Credit Interest Expense.
Explanation
Expenses are recorded on the debit side and the credit side reduces the bank amount.
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