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3 November, 10:13

On February 1, 2015, Sanger Corp. lends cash and accepts a $8,500 note receivable that offers 12% interest and is due in six months. What would Sanger record on August 1, 2015, when the borrower pays Sanger the correct amount owed? (Do not round intermediate calculations.)

Cash 9,010

Interest Revenue 340

Notes Receivable 8,670

Cash 8,500

Notes Receivable 8,500

Cash 9,010

Interest Revenue 510

Notes Receivable 8,500

Cash 9,010

Notes Receivable 9,010

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  1. 3 November, 13:09
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    Cash 9,010

    Interest Revenue 510

    Notes Receivable 8,500

    Explanation:

    The journal entry is shown below:

    Cash A/c Dr 9,010

    To Interest Revenue A/c Dr $510

    To Notes Receivable A/c Dr 8,500

    The computation of the interest revenue is shown below:

    = Principal * rate of interest * number of months : (total number of months in a year)

    = $8,500 * 12% * (6 months : 12 months)

    = $510

    The six months is calculated from February 1 to August 1
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