(1) Calculate the maturity value of the note, using the stated interest rate. (2) Calculate the present value of the note at the selling date using the days. between the sell date and maturity date and the rate money is worth. Example: A 270-day note for $3000 with interest at 8.5% is dated February 2, 2010.
Purpose of Adjusting Entries. The main purpose of adjusting entries is to update the accounts to conform with the accrual concept. At the end of the accounting period, some income and expenses may have not been recorded, taken up or updated; hence, there is a need to update the accounts.
If no journal entry was ever made for the above, then an adjusting entry is necessary. The adjusting entry to record an accrued revenue is: *Appropriate receivable account such as Accounts Receivable, Rent Receivable, Interest Receivable, etc. **Income account such as Service Revenue, Rent Income, Interest Income, etc. In our previous set of transactions, assume this additional information: