trent restaurant borrowed $110,000 on october 1 by signing a note payable to hometown bank. the interest…

trent restaurant borrowed $110,000 on october 1 by signing a note payable to hometown bank. the interest expense for each month is $825. the loan agreement requires trent to pay interest on january 2 for october, november and december. 1. make hometown banks adjusting entry to accrue monthly interest revenue at october 31, at november 30, and at december 31. date each entry and include its explanation. (record debits, then credits. select the explanation on the last line of the journal entry table.) start by making the adjusting entry to accrue monthly interest revenue for october. date accounts and explanation debit credit

trent restaurant borrowed $110,000 on october 1 by signing a note payable to hometown bank. the interest expense for each month is $825. the loan agreement requires trent to pay interest on january 2 for october, november and december. 1. make hometown banks adjusting entry to accrue monthly interest revenue at october 31, at november 30, and at december 31. date each entry and include its explanation. (record debits, then credits. select the explanation on the last line of the journal entry table.) start by making the adjusting entry to accrue monthly interest revenue for october. date accounts and explanation debit credit

Answer

Explanation:

Step1: October 31 adjusting entry

When accruing interest revenue, we debit Interest Receivable to record the amount of interest the bank has earned but not yet received, and credit Interest Revenue. The monthly interest is $825.

Date Accounts and Explanation Debit Credit
Oct 31 Interest Receivable $825
Interest Revenue $825
(To accrue monthly interest revenue)

Step2: November 30 adjusting entry

The same logic applies. We again debit Interest Receivable and credit Interest Revenue for the $825 of interest earned in November.

Date Accounts and Explanation Debit Credit
Nov 30 Interest Receivable $825
Interest Revenue $825
(To accrue monthly interest revenue)

Step3: December 31 adjusting entry

For the interest earned in December, we record the entry as follows. Debit Interest Receivable and credit Interest Revenue for $825.

Date Accounts and Explanation Debit Credit
Dec 31 Interest Receivable $825
Interest Revenue $825
(To accrue monthly interest revenue)

Answer:

Date Accounts and Explanation Debit Credit
Oct 31 Interest Receivable $825
Interest Revenue $825
(To accrue monthly interest revenue)
Nov 30 Interest Receivable $825
Interest Revenue $825
(To accrue monthly interest revenue)
Dec 31 Interest Receivable $825
Interest Revenue $825
(To accrue monthly interest revenue)