BE3.11 (LO 3) AP Butternut Squash Company has the following two notes receivable at May 31, 2021
BE3.11 (LO 3) AP Butternut Squash Company has the following two notes receivable at May 31, 2021, its fiscal year end:
1. $ 50,000 six-month, 6 % note issued January 1,2021
2. $ 20,000 three-month, 5 % note issued April 30, 2021
Interest is payable at maturity for both notes.
a. Calculate the accrued interest on both notes at May 31, 2021.
b. Prepare one adjusting journal entry to record the accrued interest on both notes.
Homework Answers
| Calculation of accrued interest | ||||
| 1. 50000*6%*5/12 = 1250 | ||||
| 2. 20000*5%*1/12 = 83.33 | ||||
| b) journal entries | ||||
| date | Particulars | Debit | Credit | |
| 31-May | interest receivable | 1333.33 | ||
| interest revenue | 1333.33 | |||
| (to record accrued interest) | ||||
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