On November 1, Bahama National Bank lends $3.5 million and accepts a six-month, 9% note receivable. Interest is due at maturity. Record the acceptance of the note and the appropriate adjustment for interest revenue at December 31, the end of the reporting period. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i. e. 5 should be entered as 5,000,000).)

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Business

Quinten Rhodes

8 July, 21:12

On November 1, Bahama National Bank lends $3.5 million and accepts a six-month, 9% note receivable. Interest is due at maturity. Record the acceptance of the note and the appropriate adjustment for interest revenue at December 31, the end of the reporting period. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i. e. 5 should be entered as 5,000,000).)

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Answers (1)

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Cristal Dunlap · Answer 1

11/01

Dr Notes Receivable 3,500,000

Cr Cash 3,500,000

12/31

Dr Interest receivable 35,000

Cr Interest revenue 35,000

Explanation:

Bahama National Bank Journal entry

11/01

Dr Notes Receivable 3,500,000

Cr Cash 3,500,000

12/31

Dr Interest receivable 35,000

Cr Interest revenue 35,000

Interest Revenue = Face Amount x Interest Rate x Time Period = 3,500,000 x. 06 x 2/12 = 35,000