Originally Posted by

**pready** The entry to recored on collection of the interest is:

Debit Cash for the amount received

Credit Interest Receivable for the amount in the account

Credit Interest Revenue for the Difference

Can you please explain why the difference is credited to interest revenue? Isn't part of the cash payment for the current year interest?

For examples, if total notes receivable was $200, the interest due (12%)would be $24. The accrued interest receivable on books was $16 so the balance is $8. Wouldn't the $8 be for interest for current year that hasn't been earned yet?