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.

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