The company would record the year-end adjusting as Interest Receivable $200 Interest Revenue $200.
Interest may be defined as the extra amount which a lender receives from a borrower on lending a particular sum of money to the borrower. The interest rates are usually kept at a normal value so that the borrower finds it suitable in borrowing the amount. Revenue on the other hand is the sum of money earned by an organization on the sale of their products. According to the question the note amount = $6000
Interest rate = 8%
The number of months left in the year = 5
Now, in order to find the journal entry, we multiply the note amount by the percentage and the number of months left out of the year that is
= $6000×(8/100)×(5/12)
= $200
Journal entry:
Interest Receivable $200(Account credited)
Interest Revenue $200(Account debited)
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