Interest Receivable
Definition: Accrued interest earned but not received
Scope:NarrowDifficulty:Easy
Accrued interest earned but not received
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Accrue interest earned | ||
| Dec 31: $750 interest earned on a note but not yet received. | ||
| Interest ReceivableAsset+ | $750 | |
| Interest RevenueRevenue+ | $750 | |
| Recognizes revenue earned in current period. | ||
| 2. Receive interest payment | ||
| Cash of $750 arrives in January. | ||
| CashAsset+ | $750 | |
| Interest ReceivableAsset− | $750 | |
| Accrued receivable cleared. No new revenue. | ||
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 RevenueInterest RevenueRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750.00
Normal bal. ▶
$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
DurationShort-Term
Related Subjects
Components
- Interest PeriodThe time span over which interest accrues
Related
- Notes ReceivableInterest commonly accrues on notes receivable
- Non-Trade ReceivablesAccrued interest is classified as a non-trade receivable
- Maturity ValueIncludes accrued interest at the note’s due date
Contrast
- Accounts ReceivableA/R arises from sales; interest receivable from lending
External Links
- Accrued interest — Wikipedia