Question

Starr Corporation loaned $600,000 to another corporation on December 1, 2020 and, in exchange, received a 3-month, 8% interest-bearing note with a face value of $600,000. What adjusting entry should Starr make on December 31, 2020

Answer 1

Adjusting entry

Date Account Title Debit Credit

Interest receivables $4,000

($600,000*8%*1/12)

Interest revenue $4,000

(To record accrued interest on note)