Penny Resources determines that it has not yet recorded the accrual for 2010 interest revenue to be received in 2011.Assuming the amount to be recorded for 2010 is $8,000, the required adjustment on December 31, 2010 is
A)debit interest receivable and credit interest revenue $8,000.
B)debit interest revenue and credit interest receivable $8,000.
C)debit interest payable and credit interest revenue $8,000.
D)no entry required.

Question

Quizplus · Accepted Answer

Since the interest revenue for 2010 has not yet been recorded and will be received in 2011, an adjustment needs to be made on December 31, 2010 to record the accrual. The accrual would be recorded as a debit to interest receivable (an asset account) and a credit to interest revenue (a revenue account) in the amount of $8,000. This option is represented by choice letter A.

Penny Resources Determines That It Has Not Yet Recorded the Accrual