I am sure it is an easy answer but I just can't figure out what i am missing? Thank you! Trial Balance Notes Payable ($9,800) Interest expense $100 Cash $9,700 Retained Earnings (Loss/DB) $100 OUT OF BALANCE $9,900 ($9,800) _______________________________________________________________________ Balance Sheet Assets Cash $9,700 Total Assets $9,700 Liabilities Notes Payable $9,800 Owners Equity Retained Earnings $(100) Total Liabilities $9,700
Interest expense causing imbalance
Answers
Retained Earnings Does not go into a balance sheet. Just assets and liabilities and expenses. So you will have
cash 9700
total assets 9700
Liabilities
Notes Payable 9800
Interest Expenses (100)
Total Liabilities = 9700 you now balance
That help?
expenses is a debit normally and liabilities is a credit.. therefore it subtracts from it.
1
"Retained Earnings Does not go into a balance sheet. Just assets and liabilities and expenses." <<< WHAT????? Repeat this again. This time say it slowly and out loud.
You are double counting the $100 interest expense on the TB....The interest expense itself AND the RE (which includes the interest expense). Your BS is in balance. The RE line on the TB should be just for entries OTHER THAN the results of current operations (your revenue and expense lines have already taken them into account)...like distribution.
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Accounting