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Interest expense causing imbalance

Arl Boyd's Profile

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

Answers

Laura Gray
Title: Tax Preparer
Company: Self-Employed
(Tax Preparer, Self-Employed) |

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.

Anonymous
(CFO) |

"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.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

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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