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 $14,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note, assuming a 360-day year, should include a

Question

Uriel Russo

Business

22 May, 04:21

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 $14,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note, assuming a 360-day year, should include a

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Ruben Lozano · Answer 1

Credit to interest revenue $210

Explanation:

The journal entry is shown below:

Interest receivable A/c Dr $210

To Interest revenue A/c $210

(Being accrued interest is recorded)

The computation of accrued interest is shown below:

= Note receivable amount * rate of interest * number of months : (total number of months in a year)

= $14,000 * 6% * (3 months : 12 months)

= $210

The 3 months is calculated from August 1 to October 30