On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $10,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Answer

a.

debit to Interest Receivable for $150

b.

debit to Notes Receivable for $10,000

c.

credit to Notes Receivable for $10,150

d.

credit to Interest Revenue for $150

Question

Business

Laci Hancock

2 December, 00:52

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $10,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Answer

a.

debit to Interest Receivable for $150

b.

debit to Notes Receivable for $10,000

c.

credit to Notes Receivable for $10,150

d.

credit to Interest Revenue for $150

+1

Answers (1)

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Trenton · Answer 1

d. credit to Interest Revenue for $150

Explanation:

Interest revenue is the earnings that an entity receives from any investments it makes, or on debt it owns. Under the accrual basis of accounting, a business should record interest revenue even if it has not yet been paid in cash for the interest, as long as it has earned the interest; this is done with an accrual journal entry.