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On December 1, Daw Co. accepts a $30,000, 45-day, 7% note from a customer.

 On December 1, Daw Co. accepts a $30,000, 45-day, 7% note from a customer.

 (1) Prepare the year-end adjusting entry to record accrued interest revenue on December 31. 

(2) Prepare the entry required on the note's maturity date assuming it is honored. (Use 360 days a year.)


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Answer #1

a) Adjusting entry

Date account and explanation Debit Credit
Dec 31 Interest receivable (30000*7%*30/360) 175
Interest revenue 175
(To record accrued interest)

b) Journal entry

Date account and explanation Debit Credit
Jan 15 Cash 30262.50
Notes receivable 30000
Interest receivable 175
Interest revenue 87.50
(To record collection)
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