Question

Randie company lends luann company $10,000 on april 1, accepting a four-month, 6% interest note. randie company prepares financial statements on april 30. what adjusting entry should be made before the financial statements can be prepared?

Answer 1

The adjusting entry that should be made by Randle Company before the financial statements can be prepared is as follows:

Debit Interest Receivable $50

Credit Interest Revenue $50

What is an adjusting entry?

An adjusting entry is an accounting entry made at the end of an accounting period to recognize income or expenses for the period that had not been recorded.

Adjusting entries are usually made for the following:

• Accrued revenues
• Accrued expenses
• Unearned revenues
• Prepaid expenses
• Depreciation expenses.

Data and Calculations:

Loan Receivable = $10,000

Date of loan = April 1

Maturity period = 4 months

Interest rate = 6%

Interest Receivable = $50 ($10,000 x 6% x 1/12)

Interest Receivable $50 Interest Revenue $50

Thus, Randle Company will debit its Interest Receivable account and credit its Interest Revenue by $50.

Learn more about adjusting entries at https://brainly.com/question/13933471