ABC Corp.received a 3-month,8% per year,$1,500 note receivable on December 1.The adjusting entry on December 31 will include a:

Question

Quizplus · Accepted Answer

Interest = Principal × Interest rate × Time
= $1,500 × 0.08 × 1/12 (for December)= $10
An adjusting entry must be recorded at the end of the accounting period to accrue the interest earned includes a debit to Interest Receivable (to increase that asset account).and a credit to Interest Revenue (to increase that revenue account)for $10.

ABC CorpReceived a 3-Month,8% Per Year,$1,500 Note Receivable on December 1