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LESSON 21-1. Accrued Revenue – Revenue earned in one fiscal period, but not received until a later fiscal period. Interest that is not received until the maturity date of the note. Calculate – P x IR x T = Accrued Interest Income Recorded by an adj. entry on work sheet
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LESSON 21-1 Accrued Revenue – Revenue earned in one fiscal period, but not received until a later fiscal period. Interest that is not received until the maturity date of the note. Calculate – P x IR x T = Accrued Interest Income Recorded by an adj. entry on work sheet Journalize in the General Journal Post to the general ledger
3 ANALYZING AN ADJUSTMENT FOR ACCRUED INTEREST INCOME page 617 1 2 1. Debit Interest Receivable. 2. Credit Interest Income. 3. Record the adjusting entry. LESSON 21-1
1 2 POSTING AN ADJUSTING ENTRY FOR ACCRUED INTEREST INCOME page 618 1. Post the debit. 2. Post the credit. LESSON 21-1
REVERSING ENTRY FOR ACCRUED INTEREST INCOME page 619 1 2 3 • Reversing entry – made at the beginning of a new fiscal period. • Opposite of adjusting entry. • Reduces the balance of Interest Receivable to zero. 1. Write the heading. 2. Debit Interest Income. 3. Credit Interest Receivable. LESSON 21-1
4 4 COLLECTING A NOTE RECEIVABLE ISSUED IN A PREVIOUS FISCAL PERIOD page 620 January 30. Received cash for the maturity value of a 90-day, 6% note: principal, $2,000.00, plus interest, $30.00; total, $2,030.00. Receipt No. 9. 1 3 2 1. Credit for the principal of the note. 2. Credit for the total interest. 3. Debit for the maturity value. 4. Post the amounts in the General columns. LESSON 21-1
TERMS REVIEW page 621 • accrued revenue • intellectual property • accrued interest income • reversing entry • CLOSING ENTRY - closing interest income for the fiscal period. Completed BEFORE reversing entry. • Debit – Interest Income (balance in the ledger after posting of adjusting entry) • Credit – Income Summary LESSON 21-1
Why do we accrue revenue? • Examples: • Bank Loan • Construction Company Example LESSON 21-1