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13 August, 18:46

On November 19, Nicholson Company receives a $24,600, 60-day, 10% note from a customer as payment on account. What adjusting entry should be made on the December 31 year-end? (Use 360 days a year.)

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  1. 13 August, 18:59
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    The adjusting entry is shown below:

    Interest expense A/c Dr $287

    To Interest payable A/c $287

    (Being accrued interest adjusted)

    The computation is shown below:

    Principal * rate of interest * number of days : (total number of days in a year)

    = $24,600 * 10% * (42 days : 360 days)

    = $287

    (11 days in November + 31 Days in December)
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