Question

on december 1, day company accepts a $40,000, 45 - day, 9% note from a customer. (1) prepare the year - end adjusting entry to record accrued interest revenue on december 31. (2) prepare the entry required on the notes maturity date assuming it is honored. note: use 360 days a year. view transaction list journal entry worksheet record the year - end adjustment related to this note, if any. date general journal debit credit december 31

Explanation:

Step1: Calculate accrued interest for December

The principal amount ($P$) of the note is $40000$, the annual interest rate ($r$) is $9\%$ or $0.09$, and the time ($t$) from December 1 - December 31 is $\frac{30}{360}$ years. The simple - interest formula is $I = Prt$.
$I=40000\times0.09\times\frac{30}{360}$
$I = 300$
The adjusting entry on December 31 to record accrued interest revenue:
Debit: Interest Receivable $300$
Credit: Interest Revenue $300$

Step2: Calculate total interest on the note's maturity

The time ($t$) for the 45 - day note is $\frac{45}{360}$ years.
$I_{total}=40000\times0.09\times\frac{45}{360}$
$I_{total}=450$
The entry on the maturity date (assuming the note is honored):
Debit: Cash ($40000 + 450$) $40450$
Credit: Notes Receivable $40000$
Credit: Interest Receivable $300$
Credit: Interest Revenue ($450 - 300$) $150$

Answer:

December 31:

Date	General Journal	Debit	Credit
	Interest Revenue		300

Maturity date (assuming honored):

Date	General Journal	Debit	Credit
	Notes Receivable		40000
	Interest Receivable		300
	Interest Revenue		150