Question

For each separate case below, follow the three-step process for adjusting the accrued revenue account at

December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the

current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1

to step 2. Assume no other adjusting entries are made during the year.

a. Accounts Receivable. At year-end, the Krug Company has completed services of \(19,000 for a client,

but the client has not yet been billed for those services.

b. Interest Receivable. At year-end, the company has earned, but not yet recorded, \)390 of interest

earned from its investments in government bonds.

c. Accounts Receivable. A painting company collects fees when jobs are complete. The work for one

customer, whose job was bid at $1,300, has been completed, but the customer has not yet been

billed.

Short answer

Interest receivable account debit and interest revenue credit with $390.

Step-by-step solution

Definition of accounts receivable

Interest receivable is the interest that is due but not received.

Current account balance account equals

The current account balance equals $0.

Current account balance should equal

The current account balance should equal $390.

Adjusting entry

	Journal entry
Date	Particulars	Debit	Credit
December 31	Interest Receivable	$390
	Interest Revenue		$390
	(Adjustment entry of interest receivable)