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

Question

Quizplus · Accepted Answer

Since the note is for three months and was received on November 1, the maturity date would be on January 31. Therefore, the adjusting entry on December 31 would have an accrued interest of two months (November and December).

To calculate the interest:
$60,000 x 6% x 2/12 = $600

The proper adjusting entry would be to credit Interest Revenue for $600.

On November 1,Willis Corporation Sold Merchandise in Return for a 6%,three-Month