On November 1, Willis Corporation sold merchandise in return for a 6%, 90-day note receivable in the amount of $60,000. The proper adjusting entry at December 31 (end of Willis's fiscal year) includes a:

Question

Quizplus · Accepted Answer

Since the note is for 90 days and it was issued on November 1, the maturity date would be January 30 (90 days after). Since Willis fiscal year ends on December 31, the note was outstanding for only 60 days at the end of the fiscal year. Therefore, the interest revenue to be recognized would be calculated as follows: 
$60,000 × 6% × (60/360) = $600 
Therefore, the proper adjusting entry at December 31 would be a credit to Interest Revenue for $600.

On November 1, Willis Corporation Sold Merchandise in Return for a 6