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trial balance 31 march 2015
In Clarion’s trial balance loan interest paid 800 has been showed and in the notes 20000 loan note’s 5000 amount was repaid and 8% on 20000 will be 1600 and 6 month interest pay loan interest was paid which is 1600*6/12=800
My question is here why i recognize interest paid on trial balance 800 in P/L again?
the rest 800 we recognize that is understandable but INTEREST PAID 800 it has been paid?Because Interest paid 800 on trial balance covers the year between 2014 and 2015?is this right?
How much is a full year’s interest at 8% on a loan of $20,000?
(Do you understand what is the purpose of a trial balance?)
full interest will be 1600 and six months’ outstanding interest was paid (800) shown in trial balance.The suspense account shows 5800 which consist of redemption about of 20000/4 quarter =5000 plus 800 interest pay.
I know what is the purpose of trial balance and I understand.
do we together take interest paid 800 and the rest 800 in suspense account and recognise it in P/L?I was stuck here because when i was doin clarion I have not paid attention answer of this long question but now i saw interest paid 800 is added over interest pay of 800 which is in the suspense account, together 1600.It has been paid why we took it?
Probably interest paid in trial balance covers the period of 2014 and 2015 that is why we recognised it.this is my understanding, the is up to ur explanation
“do we together take interest paid 800 and the rest 800 in suspense account and recognise it in P/L?”
Of course we do … if the statement of profit or loss covers a full year, then we should include a full year’s loan interest
“Probably interest paid in trial balance covers the period of 2014 and 2015 that is why we recognised it.this is my understanding, the is up to ur explanation”
The $800 interest in the trial balance relates to the first half year of 8% interest on a $20,000 loan, amount paid probably half way through the year
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