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    Jfredricks33's Avatar
    Jfredricks33 Posts: 14, Reputation: 1
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    #1

    Feb 2, 2013, 01:38 PM
    Adjusting entry
    Yorkis Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2012.

    What is the adjusting entry for this if the books are being closed on December 31, 2012?
    Jfredricks33's Avatar
    Jfredricks33 Posts: 14, Reputation: 1
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    #2

    Feb 2, 2013, 01:41 PM
    It's a note payable by the way
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #3

    Feb 2, 2013, 01:43 PM
    You have to calculate one month of interest. The formula for interest is: Interest = Principal X Rate X Time

    So Take your Principal times your rate times 1/12 to get one month worth of interest.

    Your accounts to debit and credit are Interest Expense and Interest Payable.
    Jfredricks33's Avatar
    Jfredricks33 Posts: 14, Reputation: 1
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    #4

    Feb 2, 2013, 01:49 PM
    Thank you!
    Fidget1's Avatar
    Fidget1 Posts: 105, Reputation: 4
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    #5

    Feb 2, 2013, 04:05 PM
    Careful - your loan note is in days, so your interest calculation should be in days as well.
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