1. Loan 1 is a 4%, 5-year balloon loan for $3,000,000 with interest due and paid annually on December 31. Drake records interest annually on December 31. Drake incorrectly recorded the journal entry for the Year 1 interest expense and payment as a debit to accrued interest payable and a credit to cash. Prepare the net journal entry to correct Year 1 and properly record the interest attributable to the loan as of and for the year ended December 31, Year 2.

Explanation:

Loan          3000000

Interest        4%

There are three steps to solve correction of errors entries

Step-1         what entry have been made

Step-2         what should be the actual entry.

Step-3         what should be net entry to make it correct.

Step-1         what entry have been made

Accrued Expense payble   3000000*4%         120000

                                       Cash                                            120000

Wrong entry that has been in books. instead of recording expense we have reduced the liability by debiting it.

Step-2         what should be the actual entry.

interest Expense    3000000*4%         120000

                           Cash                                            120000

The correct entry that should have been made

Step-3         what should be net entry to make it correct.

interest Expense    3000000*4%         120000

                       Accrued Expense payble   3000000*4%         120000

Now we have debited the expense that should be recorded and to increase the laibility we have credited the liability that have been decreased in entry 1.

answer; encouraging the development of innovations by firms attempting to break a monopoly; (creative destruction)

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.