The entry to reverse the adjustment for accrued interest income consists of a debit to
A)Interest Income and a credit to Income Summary.
B)Interest Income and a credit to Interest Receivable.
C)Interest Receivable and a credit to Interest Income.
D)Interest Income and a credit to Interest Expense.

Question

Quizplus · Accepted Answer

When the accrual is reversed, the interest income that was recorded earlier is no longer valid, and it needs to be removed from the books. Therefore, the debit is made to Interest Income account to reduce its balance, and the credit is made to Interest Receivable account to reverse the original accrual.

The Entry to Reverse the Adjustment for Accrued Interest Income