Question

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

Answer 1

Answer:

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.