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24 December, 09:26

On February 1, 2021, Sanger Corp. lends cash and accepts a $7,000 note receivable that offers 20% interest and is due in six months. What would Sanger record on August 1, 2021, when the borrower pays Sanger the correct amount owed

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  1. 24 December, 09:40
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    Sanger Will record

    Dr. Cash $7,700

    Cr. Note Receivable $7,000

    Cr. Interest Income $700

    Explanation:

    Note Receivable is promise in writting to receive a sum of money in future. The money normally consists of Principal and interest.

    Principal = $7,000

    On August 1, 2021, only six months have passes after recept of Note.

    Interest = $7,000 x 20% x 6/12 = $700
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