Question

Post Company lends Blue Company $40,000 on April 1, accepting a 4 month, 4.5% interest note. Post Company prepares financial statements on April 30. What adjusting entry should they make?

Debit note receivable $40,000; Credit Cash $40,000

Debit interest receivable $150; Credit interest revenue $150

Debit cash $150; Credit interest revenue $150

Debit interest receivable $600; Credit interest revenue $600

Answer 1

Answer:Debit interest receivable $150; Credit interest revenue $150--- B

Step-by-step explanation:

Interest Receivable = Principal x Rate x Time ( from April 2st to 31st--Imonth)

$40,000 x 4.5% x 1/12

= $ 150

Journal entry to record amount on interest note on April 31st

Date Account titles Debit Credit

April 31st interest receivable $150

interest revenue $150