Asked by Surinder Gujral on Jun 16, 2024
Verified
Suppose that at the end of the year there is an outstanding note receivable. The adjusting entry to recognize the interest to be paid has what effect on the accounting equation?
Note Receivable
A written promise to pay a specified amount of money, with interest, by a certain date.
Adjusting Entry
An accounting journal entry made at the end of an accounting period to allocate income and expenditure to the correct period.
Interest Payment
The amount paid by a borrower to a lender as a charge for borrowing money, usually expressed as an annual percentage of the principal amount.
- Gain an understanding of the economic impacts and the journal entries associated with notes receivable, including the calculation of interest and assessment of maturity values.
Verified Answer
RE
Rebecca EdlerJun 21, 2024
Final Answer :
Assets (Interest Receivable) increase and stockholders' equity (revenue) increases.
Learning Objectives
- Gain an understanding of the economic impacts and the journal entries associated with notes receivable, including the calculation of interest and assessment of maturity values.