Question

trent restaurant borrowed $110,000 on october 1 by signing a note payable to hometown bank. the interest expense for each month is $825. the loan agreement requires trent to pay interest on january 2 for october, november and december. read the requirements. to accrue interest revenue for december. 2. post all three entries to the interest receivable account and enter the ending balance of the account as of december 31. interest receivable october 31 825 november 30 825 december 31 825 balance 2,475 3. record the receipt of three months interest on january 2. (record debits, then credits. select the explanation on the last line of the journal entry table.) date accounts and explanation debit credit

Explanation:

Step1: Identify accounts for journal entry

On January 2, when the interest is received, we debit Cash (as cash is coming in) and credit Interest Receivable (to remove the accrued interest balance).

Step2: Determine amounts

The total interest for three - months is $825\times3 = 2475$. So, the debit to Cash and credit to Interest Receivable will be for $2475$.

Date	Accounts and Explanation	Debit	Credit
	Interest Receivable		2475
	To record receipt of interest

Answer:

Date	Accounts and Explanation	Debit	Credit
	Interest Receivable		2475
	To record receipt of interest