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.)

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)