Principle Place determines that it has NOT yet recorded the 2020 accrual for interest revenue to be received in 2021. Assuming the amount to be recorded for 2020 is $ 6,000, the required adjustment at December 31, 2020, is
A) debit Interest Receivable and credit Interest Revenue $ 6,000.
B) debit Interest Revenue and credit Interest Receivable $ 6,000.
C) debit Interest Payable and credit Interest Revenue $ 6,000.
D) No adjusting entry is required.

Question

Quizplus · Accepted Answer

The adjustment needed is to record the interest revenue earned but not yet received as of December 31, 2020. This requires a debit to Interest Receivable, which represents the amount of interest that has been earned but not yet received, and a credit to Interest Revenue, which recognizes the revenue earned in accordance with the accrual accounting method. Therefore, the correct choice is A.

Principle Place Determines That It Has NOT Yet Recorded the 2020