On November 1, Alan Company signed a 120-day, 12% note payable, with a face value of $15,300. What is the adjusting entry for the accrued interest at December 31 on the note

DebitbAccrued Interest on Note receivable -$311.1

Credit Interest Income -$311.1

Explanation:

Preparation of the adjusting entry for the accrued interest at December 31 on the note for Alan Company

The Interest earned till 31 December will be :

(30+31 days)=61 days

=(15,300×12%×61days)÷360 days

=$111,996÷360 days

=$311.1

The Adjusting Entry for Alan Company will therefore be:

Debit Accrued Interest on Note receivable -$311.1

Credit Interest Income -$311.1

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