Question

louvers, inc., accepted a $15,000, 180-day, 10 percent note from a customer on may 31. louvers plans to prepare financial statements as of june 30, the end of its fiscal year.

Answer 1

If on May 31, Louvers Inc. took a $15,000, 180-day, 10% note from a client. For Louvers, the required adjusting entry for June 30 will be to credit $125 in interest revenue and debit interest receivable is $125.

What is interest receivable?

The amount of interest generated but unpaid in cash is known as interest receivable. Many businesses won't record this amount because they believe it to be irrelevant. The typical journal entry used to record interest receivable is a debit to the interest receivable account and a credit to the interest income account. When the real interest payment is received, the entry is a debit to the cash account and a credit to the interest receivable account, removing the balance in the interest receivable account.

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