On November 1, Sanddel Corporation accepted a 3 month note receivable for services provided. The terms of the note were $8,000 face value with 6% interest. Sanddel Corporation closes its books on December 31. What is the entry for accrued interest on December 31?

The adjusting entry is recorded below:

On December 31

Interest Expense A/c Dr $40

To Accrued Interest A/c $40

(Being accrued interest is recorded)

The computation of the accrued interest is shown below:

= Note receivable * interest rate * number of months : total number of months in a year

= $8,000 * 6% * 1 months : 12 months

= $40