Answer: The answer is as follows:
Explanation:
Joyce's Gift signs a three-month note
period expired = 2 months
Note is signed on Nov 1 in the amount of $50k with annual interest 12%
Interest = [tex]50000 \times \frac{12}{100} \times \frac{2}{12}[/tex]
= $1000
Therefore, the Journal entry for this adjustment is as follows:
Interest Expense A/C 1000
To Interest Payable A/C 1000
(adjusting entry to be made on Dec 31 for the interest expense accrued to that date)
