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On November 19, Hayes Company receives a $15,000, 60-day, 10% note from a customer as payment on his account. What adjusting entry should be made on the December 31 year-end

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tutorAnne

Answer:  A debit to Interest receivable  at $175

               A credit  to Interest Revenue      at $175

Explanation:

Interest revenue = Principal x rate s time ( from Nov 19 - December 31st)

=$15,000 x 10% x 42/360  ( taking days in a year = 360 days )

= $175

Adjusting  Journal entry for Hayes Company on December 31st year end

Date            Account titles                         Debit        Credit

December 31st   Interest receivable       $175

                             Interest Revenue                              $175

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