Question

On December 1, Daw Co. accepts a $32,000, 45-day, 9% 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.) 

Answer 1

SOLUTION

S.No.	Date	Accounts titles and Explanation	Debit ($)	Credit ($)
1.	Dec.31	Interest receivable	240
		Interest revenue (32,000*9%*30/360)		240
		(To record the interest revenue accrued)
2.	Jan.15	Cash	32,360
		Interest receivable		240
		Interest revenue (32,000*9%*15/360)		120
		Notes receivable		32,000
		(To record the maturity of notes)