Question

Louvers, Inc., accepted a $15,000, 180-day, 10 percent note from a customer on May 31. On June 30, Louvers prepared a period- end adjusting entry to accrue the $125 of interest owed on the note. The note is honored on November 27.
Prepare the necessary November 27 entry for Louvers by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. If there are multiple debits or multiple credits, please enter the account titles in alphabetical order.

Answer 1

Answer:

November 27                                      Debit                 Credit

Bank                                                    $15,750

(15,000+15,000*10%*180/360)

Accrued interest income                                              $125          

Interest income                                                              $625

Note receivable from customer                                   $15,000

Explanation:

The following journal entry shall be booked by the Louvers, Inc. in its accounts as at November 27 in respect of note from customer:

November 27                                      Debit                 Credit

Bank                                                    $15,750

(15,000+15,000*10%*180/360)

Accrued interest income                                              $125  

(Interest receivable recorded at June 30)        

Interest income                                                              $625

(Interest income from June 30 to November 27)

Note receivable from customer                                   $15,000