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10 October, 12:43

On August 1, 2018, Turner Manufacturing lends cash and accepts a $6,000 note receivable that offers 8% interest and is due in nine months. How would Turner record the year-end adjustment to accrue interest in 2018

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  1. 10 October, 13:00
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    Note amount: $6,000

    Interest amount: 8%

    Months left in the year: 5

    To solve:

    Multiply the note amount by the percentage and the amount of months left out of the year.

    $6,000 x 8% x 5/12 = $200

    Journal Entry:

    Interest Receivable $200

    Interest Revenue $200
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