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1 June, 12:58

On November 1, Alan Company signed a 120-day, 12% note payable, with a face value of $15,300. What is the adjusting entry for the accrued interest at December 31 on the note

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  1. 1 June, 14:10
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    DebitbAccrued Interest on Note receivable - $311.1

    Credit Interest Income - $311.1

    Explanation:

    Preparation of the adjusting entry for the accrued interest at December 31 on the note for Alan Company

    The Interest earned till 31 December will be:

    (30+31 days) = 61 days

    = (15,300*12%*61days) : 360 days

    =$111,996:360 days

    =$311.1

    The Adjusting Entry for Alan Company will therefore be:

    Debit Accrued Interest on Note receivable - $311.1

    Credit Interest Income - $311.1
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