Question

On December 31,2018,Infinity Inc.records an adjusting entry to accrue interest on a note.On January 31,2019,Infinity receives a check for $4,680,which represents two months of accumulated interest on the note.Upon receipt of this interest payment,Infinity should debit: A)Interest Receivable for $2,340,debit Cash $2,340,and credit Interest Revenue for $4,680. B)Cash for $4,680,credit Interest Receivable for $2,340,and credit Interest Revenue for $2,340. C)Cash for $4,680 and credit Interest Receivable for $4,680. D)Cash for $4,680 and credit Interest Revenue for $4,680.

Answer 1

D)Cash for $4,680 and credit Interest Revenue for $4,680.

Step-by-step explanation:

The Journal entry with their narrations and explanation is here shown below:-

Cash Dr, $4,680

To Interest revenue $4,680

(Being receipt of interest payment is recorded)

Therefore for recording this entry here we debited the cash as it is received and we credited the interest revenue as it is decreasing.