Question

Louvers, Inc., accepted a $15,000, 180-day, 10 percent note from a customer on May 31. On June 30, Louvers prepared a period-end adjusting entry to accrue the $125 of interest owed on the note. The note is honored on November 27. Prepare the necessary November 27 entry for Louvers by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. If there are multiple debits or multiple credits, please enter the account titles in alphabetical order.

Answer 1

Step-by-step explanation:

The Journal Entry is shown below:-

Cash Dr, $15,750

To Interest revenue $625

To Interest receivable $125

To Note receivable $15,000

(Being cash is recorded)

Working Note :-

Interest revenue = Note receivable × Interest rate × Time period

= 15,000 × 10% × 150 ÷ 360

= $625