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On November 1, Jay Company loaned an affiliate $100,000 at a 9.0% interest rate. The note...

On November 1, Jay Company loaned an affiliate $100,000 at a 9.0% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company's annual accounting period ends on December 31. The adjusting entry needed on December 31 is:

A) Debit Interest Receivable, $750; credit Interest Revenue, $750.

B) Debit Interest Expense, $750; credit Interest Payable, $750.

C) Debit Interest Expense, $1,500; credit Interest Payable, $1,500.

D) Debit Interest Receivable, $2,250; credit Interest Revenue, $2,250.

E) Debit Interest Receivable, $1,500; credit Interest Revenue, $1,500.

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Answer #1

Answer :

E) Debit Interest Receivable, $1,500; credit Interest Revenue, $1,500.

Explanation :

Note - Interest for the remaining period to be booked in next year.

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