Question

Harper Company lends Hewell Company $58,800 on March 1, accepting a four-month, 7% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared

Answer 1

Answer and Explanation:

The adjusting entry made is shown below:

Interest receivable Dr. $343 ($58,800 × 7% × 1 months ÷ 12 months)

To Interest revenue $343

(Being the interest receivable is recorded)

For recording this we debited the interest receivable as it increased the assets and credited the interest revenue as it also increased the revenue so that the proper journal entry entry is recorded and posting too