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podryga [215]
3 years ago
8

Sheffield Company lends Pharoah Company $10100 on April 1, accepting a four-month, 12% interest note. Sheffield Company prepares

financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?
Business
1 answer:
Monica [59]3 years ago
6 0

Answer:

The answer is:

  • Dr Interest receivable 303
  • Cr Interest revenue 303

Explanation:

The total interest Sheffield Company will charge during the four months is $1,212, equivalent to $303 per month. Since only one month has passed since the debt was made, Sheffield should record revenue for one month interest:

  • Dr Interest receivable 303
  • Cr Interest revenue 303

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