Asked by Brittany Hoffman on Jul 13, 2024
Verified
The adjusting entry to record accrued interest on a note receivable due next year consists of a
A) debit to Interest Expense and a credit to Interest Payable.
B) debit to Interest Receivable and a credit to Interest Revenue.
C) debit to Interest Expense and a credit to Interest Receivable.
D) debit to Interest Receivable and a credit to Cash.
Accrued Interest
Interest that has been incurred but not yet paid, often related to bonds or loans.
Note Receivable
A written promise that a certain amount of money will be paid at a future date, representing an asset for the holder.
Interest Revenue
Income earned by an entity from lending money or through investments in interest-bearing assets.
- Absorb the essentials of accrued expenses and revenues, including how to carry out appropriate adjustments.
Verified Answer
AB
Ashanti Bracey
Jul 15, 2024
Final Answer :
B
Explanation :
The correct adjusting entry for recording accrued interest on a note receivable involves debiting Interest Receivable (to recognize the interest income that has been earned but not yet received) and crediting Interest Revenue (to record the income earned during the period).
Learning Objectives
- Absorb the essentials of accrued expenses and revenues, including how to carry out appropriate adjustments.