On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $22,500. What is the adjusting...

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On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $22,500. What is the adjusting...

On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $22,500. What is the adjusting entry for the accrued Interest at December 31 on the note? (Use 360 days a year.)

business accounting

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Answer 1

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Answer #2

The adjusting entry would be:

Date	Accounts title	Debit	Credit	Working
31-Dec	Interest Expense	$375		1 Nov to 31 Dec = 60 days
	Interest Payable		$375	[$22500 x 10% x 60/360 days]
	(to record interest accrued for 2 months or 60 days)

answered by: bill

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Answer 2

Answer #1

Interest earned till 31 December 2019(30+31 days)

=(22500×10%×61days)÷360 days

=$381.25

Adjusting Entry

Dr. Accrued Interest on Note receivable -$381.25

Cr. Interest Income -$381.25

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Answer 3

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