Question

On August​ 1, 20182018​, AvonetteAvonette​, ​Inc., sold equipment and accepted a​ six-month, 99​%, $ 50 comma...

On August​ 1,

20182018​,

AvonetteAvonette​,

​Inc., sold equipment and accepted a​ six-month,

99​%,

$ 50 comma 000$50,000

note receivable.

AvonetteAvonette​'s

​year-end is December 31. Which of the following accounts will

AvonetteAvonette

credit in the journal entry at maturity on February​ 1,

20192019​,

assuming collection in​ full?

A.

Cash

B.

Note Payable

C.

Interest Payable

D.

Interest Receivable

Business   Accounting   
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Answer #1
Answer: 1) preparation of Journal Entry
Date Accounts Titles and Explanation Amount ($) Amount ($)
Feb 1 , 2019 Cash    $52,250
         Notes Receivable $50,000
          Interest Receivable
          ($50,000 x 9% x 5/12)		 $1,875
          Interset Revenue
          ($50,000 x 9% x 1/12)		 $375
(To record the collection of note along with interest at maturity)
From given options, option (D) is correct.i.e, Interest Receivable
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