The adjusting entry to record accrued interest on a note receivable due next year consists of a
A)debit to Interest Expense and a credit to Interest Payable.
B)debit to Interest Receivable and a credit to Interest Revenue.
C)debit to Interest Expense and a credit to Interest Receivable.
D)debit to Interest Receivable and a credit to Cash.

Question

Quizplus · Accepted Answer

The correct adjusting entry for recording accrued interest on a note receivable involves debiting Interest Receivable (to recognize the interest income that has been earned but not yet received) and crediting Interest Revenue (to record the income earned during the period).

The Adjusting Entry to Record Accrued Interest on a Note