Interest Income
Definition: Income from lending or debt holdings
Scope:ModerateDifficulty:Easy
Income from lending or debt holdings
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Accrue interest earned | ||
| $750 interest earned but not yet received. | ||
| Interest ReceivableAsset+ | $750 | |
| Interest Income | $750 | |
| Revenue recognized in the period earned. | ||
| 2. Receive interest | ||
| Collect $750 cash. | ||
| CashAsset+ | $750 | |
| Interest ReceivableAsset− | $750 | |
| Receivable cleared; revenue was already recognized. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Interest ReceivableInterest ReceivableAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$750.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750.00
$0.00
Interest IncomeInterest IncomeAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750.00
$750.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$750.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750.00
DurationN/A
External Links
- Interest#Accounting — Wikipedia