Misspurered
Aug 3, 2014, 12:42 AM
The notes receivable were accepted from several customers. The notes were issued on sept. 1,2014 and will be settled together with a 20% interest on may 31,2015.
Notes receivable:360 000
pready
Aug 3, 2014, 12:53 PM
For the adjusting entry you need to compute the amount of interest that is due. So if this is at year end on 31 Dec you have to calculate 4 months of interest.
The formula to calculate interest is: Interest = Principal * Rate * Time
$360,000 * 20% * 4/12 = Interest Earned
The accounts used for this adjusting entry will be Interest Revenue and Interest Receivable