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20 October, 18:52

Emerald Jewelery Store had a credit balance in interest payable of $200 at the beginning of the period, and a credit balance of $50 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

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  1. 20 October, 21:19
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    Net income will be decreased by $150.

    Explanation:

    Given:

    The credit balance of interest payable (Opening) = $200

    Credit balance of interest payable (Closing) = $50

    Net income will be decreased by $150.

    Decreased net income = credit balance of payable (Opening) - credit balance (Closing)

    Decreased net income = $200 - $50

    Decreased net income = $150

    The interest of $150 was paid which would reduce the net profit.
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