If a mortgage payment is due by December 31, but the payment is not made until the following month, should the loan payment be accrued at December 31?
The interest portion of the mortgage payment should be accrued as of December 31 under the accrual method of accounting. In other words, there needs to be an adjusting entry dated December 31 to debit Interest Expense and to credit Interest payable for the amount of interest owed as of December 31.
The principal balance on the mortgage loan already appears in the general ledger and on the balance sheet as the liability Mortgage Loan Payable. Therefore, there is no accrual needed for the principal portion of the loan payment due at December 31.
Comments
4 Responses to “If a mortgage payment is due by December 31, but the payment is not made until the following month, should the loan payment be accrued at December 31?”
Leave a Reply
 | Free updates with your feed reader (or) receive our monthly Q&A newsletter by filling out the form below: |
Accounting Cheat Sheet
Receive our popular 15-page Cheat Sheet at no cost when
you join our free newsletter:
|
We keep your email address 100% safe and secure.
Most Recent Questions
- In a bank reconciliation, what happens to the outstanding checks of the previous month?
- Is Accounts Payable a debit or a credit or both?
- Why are loan costs amortized?
- Are repairs to office equipment and factory equipment period costs?
- Why would a company use double-declining depreciation on its financial statements?
- What is a natural business year?
- What is the difference between a ledger and a trial balance?
Questions by Category
- Debits and Credits
- Depreciation
- Financial Accounting
- Financial Ratios
- Improving Profits
- Income Statement
- Inventory and Cost of Goods Sold
- Lower of Cost or Market
- Manufacturing Overhead
- Nonmanufacturing Overhead
- Payroll Accounting
- Present Value of a Single Amount
- Present Value of an Ordinary Annuity
- Standard Costing
- Stockholders' Equity
Why AccountingCoach.com?
AccountingCoach.com is designed to help people without an accounting background easily understand accounting concepts at no cost.
By investing thousands of hours, we have created clear and concise accounting information for both business people and students of all ages.
Read 1,200+ Visitor Testimonials
I am a Liberian presently visiting your website. Its good discovering such a meaningful website. I have learnt a lot from and i want to be grateful.
Dear Editor
I am a college student from Washington, DC Currently attending accounting 101 and I am studing for exam your site is helping me a lot along my notes please keep the good work!
i’m really having a hard time in my accounting subject.. thanks to this website, it’s a lot easier for me.. it’s like my tutor at home.. i hope the editor could have some examples that could help 17 year olds like me to understand easily the topics. ^.^
really guys it’s a great work for you guys
keep up the good work
i learned a lot from this site it’s outrageous.