A bank lent $100,000 to a customer on December 1 that required the customer topay an annual percentage rate (APR) of 12% on the amount of the loan. The loan is duein six months and no payment of interest or principal is to be made until the note is dueon May 31. The bank prepares monthly financial statements at the end of each calendarmonth. The following questions pertain to the adjusting entry that the bank will be making for its accounting records. Question: What date should be used to record the December adjusting entry?

College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
ChapterD: Notes Payable And Notes Receivable
Section: Chapter Questions
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A bank lent $100,000 to a customer on December 1 that required the customer to
pay an annual percentage rate (APR) of 12% on the amount of the loan. The loan is due
in six months and no payment of interest or principal is to be made until the note is due
on May 31. The bank prepares monthly financial statements at the end of each calendar
month. The following questions pertain to the adjusting entry that the bank will be making for its accounting records.

Question:
What date should be used to record the December adjusting entry?

 

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