Asked by Trina Blaise on May 05, 2024
Verified
Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared? a. Cash 200
\quad\quad\quad Interest Revenue 200
b. Interest Receivable 800\quad 800800
\quad\quad\quad Interest Revenue 800\quad 800800
c. Interest Receivable 200
\quad\quad\quad Interest Revenue 200
d. Notes Receivable 40,000\quad 40,00040,000
\quad\quad\quad Cash 40,000
Adjusting Entry
A journal entry made at the end of an accounting period to update account balances before preparing financial statements, ensuring they reflect the true financial position.
Financial Statements
Financial reports that summarize the effects of events on a business.
Interest Note
A financial instrument that serves as a formal promise to pay interest in addition to the principal amount borrowed.
- Understand the treatment of notes receivable, including interest calculation and recognition.
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Learning Objectives
- Understand the treatment of notes receivable, including interest calculation and recognition.