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19 December, 05:17

On September 15, 2021, Oliver's Mortuary received a $3,600, nine-month note bearing interest at an annual rate of 14% from the estate of Jay Hendrix for services rendered. Oliver's has a December 31 year-end. What adjusting entry will the company record on December 31, 2021

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  1. 19 December, 06:44
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    The Journal entry is as follows:

    On December 31, 2021

    Interest Receivable A/c Dr. $147

    To Interest revenue A/c $147

    (To record the interest receivable)

    Working notes:

    Interest Receivable:

    = Amount received * Annual rate of interest * Time period

    = $3,600 * (14% : 12) * 3.5

    = $3,600 * 0.01167 * 3.5

    = $147
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