Question

Included in Larkspur Company’s December 31 trial balance is a note receivable of $10,800. The note is a 4-month, 10% note dated October 1. Prepare Larkspur’s December 31 adjusting entry to record $270 of accrued interest, and the February 1 journal entry to record receipt of $11,160 from the borrower.

Answer 1

Date	Accounts Titles and Explanation	Debit (in $)	Credit (in $)
Dec-31	Interest Receivable	$ 270
	Interest Revenue		$ 270
	(To record the interest accrued)
Feb-01	Cash	$ 11,160
	Interest Receivables		$ 270
	Interest Revenue               ( $ 10,800 x 10% x 1 /12)		$ 90
	Notes Receivables		$ 10,800
	(To record the receipt of notes receivable)