Following are selected transactions for Vitalo Company. Nov. 1 Accepted a $12,000, 180-day, 5%...


Following are selected transactions for Vitalo Company.

Nov. 1Accepted a $12,000, 180-day, 5% note dated November 1 from Kelly white in granting a time extension on her past-due account receivable.
Dec. 31 Adjusted the year-end accounts for the accrued interest earned on the white note.
Apr. 30 White honored her note when presented for payment; February has 28 days for the current year.

Complete the table to calculate the interest amounts at December 31st and April 30th and use those calculated values to prepare your journal entries.

Adjusting Journal Entries - Interest

Adjusting journal entries pertain to entries that are usually made at every year-end. This is done to account for any income earned and expense incurred following the accrual basis of accounting. One typical example of adjustments made at year-end is interest income/expense.

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Interest is computed using the formula below.

Interest = Principal x Interest rate x Term/360 days, where as the term refers to the duration of the...

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Adjusting Entries: Definition, Types & Examples


Chapter 22 / Lesson 16

Learn the definition of adjusting entries in accounting, and find examples. Explore the various types of adjusting journal entries, and examine how to do them.

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