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. Prepare the necessary June 30 adjusting entry for Louvers by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

If Louvers, Inc., accepted a $15,000, 180-day, 10 percent note from a customer on May 31. The necessary June 30 adjusting entry for Louvers will be:

Debit Interest receivable  $125

Credit Interest revenue $125

Louvers, Inc. Adjusting Journal entry

Debit Interest receivable  $125

Credit Interest revenue $125

($15,000 × 10% × 30/360)

(To record interest receivable)

The Interest amount  of $125 calculated as ($15,000 × 10% × 30/360) is due at maturity. Between May 31 and June 30, a total of 30 days passed.

Inconclusion the necessary June 30 adjusting entry for Louvers will be:

Debit Interest receivable  $125

Credit Interest revenue $125

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Interest receivable

       To Interest revenue

(Being the interest receivable is recorded)

Explanation:

The adjusting entry is as follows

Interest receivable

       To Interest revenue

(Being the interest receivable is recorded)

The computation is shown below:

= Principal × rate of interest × number of days ÷ (total number of days in a year)  

= $15,000 × 10% × (30 days ÷ 360 days)

= $125

The 30 days is calculated from May 31 to June 30

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