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On November 19, Nicholson Company receives a $15,600, 60-day, 5% note from a customer as payment on account. What adjusting entry should be made on the December 31 year-end? (Use 360 days a year.)

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Tundexi

Answer:

Debit - Interest receivables $91

Credit - Interest revenue  $91

Explanation

Note = $15,600

Interest rate = 5%

Note received on - Nov 19

Days between Nov 19 - Dec 31 = 42 days

Interest revenue = $15,600 * 5% * 42/360

Interest revenue = $91

 Date      Account Title               Debit     Credit

                Interest receivables     $91

                          Interest revenue                 $91

                (Been adjusting entry on the note)

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