LESSON 21-1 Accrued Revenue – 8/7/2018 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

ANALYZING AN ADJUSTMENT FOR ACCRUED INTEREST INCOME page 617 1 3 2 1. Debit Interest Receivable. 2. Credit Interest Income. 3. Record the adjusting entry. LESSON 21-1

POSTING AN ADJUSTING ENTRY FOR ACCRUED INTEREST INCOME page 618 1 2 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

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. 4 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 accrued revenue intellectual property 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