The Interest Expense in the worksheet's unadjusted trial balance column is $1,000.Interest Expense in the income statement column is $12,000.Which of the following entries would have caused this difference?
A) a $12,000 credit to Interest Expense in the worksheet's adjustments column
B) a $12,000 credit to Interest Payable in the worksheet's adjustments column
C) a $11,000 debit to Interest Expense in the worksheet's adjustments column
D) a $11,000 credit to Interest Expense in the worksheet's adjustments column

Question

Quizplus · Accepted Answer

The unadjusted trial balance column shows the actual expense incurred during the period, which is $1,000 in this case. However, the income statement column shows the total expense recognized during the period, which includes both the actual expense and any adjustments made at the end of the period.

To increase the Interest Expense from $1,000 to $12,000, a debit entry of $11,000 should be made to the Interest Expense account in the adjustments column of the worksheet. This indicates that an additional $11,000 of interest expense was recognized at the end of the period and needs to be recorded in the financial statements. Option C is the only one that reflects this entry.

Option A is incorrect because a $12,000 credit would decrease the Interest Expense, not increase it.
Option B is incorrect because a credit to Interest Payable would not affect the Interest Expense account.
Option D is incorrect because a credit entry would decrease the Interest Expense, not increase it.

The Interest Expense in the Worksheet's Unadjusted Trial Balance Column