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

Question

Dominique Carter

Business

1 September, 02:45

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

+5

Answers (1)

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Makayla Cain · Answer 1

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