Question

On August 1, 2018, Turner Manufacturing lends cash and accepts a $6,000 note receivable that offers 8% interest and is due in nine months. How would Turner record the year-end adjustment to accrue interest in 2018

Answer 1

Note amount: $6,000
Interest amount: 8%
Months left in the year: 5

To solve:
Multiply the note amount by the percentage and the amount of months left out of the year.
$6,000 x 8% x 5/12 = $200

Journal Entry:
Interest Receivable $200
Interest Revenue $200