Question

On August 1, 2021, Turner Manufacturing lends cash and accepts a $9,000 note receivable that offers 6% interest and is due in nine months. How would Turner record the year-end adjustment to accrue interest in 2021? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) A. Interest Revenue 291 Interest Receivable 291 B. Interest Receivable 540 Interest Revenue 540 C. Interest Receivable 291 Interest Revenue 291 D. Interest Receivable 225 Interest Revenue 225

Answer 1

D. Interest Receivable 225 Interest Revenue 225

Step-by-step explanation:

The journal entry is shown below:

Interest receivable Dr ($9,000 × 6% × 5 ÷ 12) $225

To Interest revenue $225

(Being accrued interest is recorded)

For recording this, we debited the interest receivable as it increased the asset sand credited the interest revenue as it also increased the revenue

Therefore the last option is correct