Answer:
$933.33
Step-by-step explanation:
Since the loan was made on June 1, Siebens Enterprises must record accrued interest equivalent to 7 months of interest:
accrued interest = principal x interest rate x months/12 = $20,000 x 8% x 7/12 = $933.33
The journal entry used to record accrued interest should be:
Dr Interest receivable 933.33
Cr Accrued interest revenue 933.33
Accrual accounting principle states that revenues and expenses must be recognized during the accounting period that they occur, and in this case, the interest was earned during 2014.