Question

On November 19, Hayes Company receives a $15,000, 60-day, 10% note from a customer as payment on his account. What adjusting entry should be made on the December 31 year-end

Answer 1

Answer: A debit to Interest receivable at $175

A credit to Interest Revenue at $175

Step-by-step explanation:

Interest revenue = Principal x rate s time ( from Nov 19 - December 31st)

=$15,000 x 10% x 42/360 ( taking days in a year = 360 days )

= $175

Adjusting Journal entry for Hayes Company on December 31st year end

Date Account titles Debit Credit

December 31st Interest receivable $175

Interest Revenue $175