Asked by mariam sadat on Jun 18, 2024
Verified
Jasper's entry to record the collection of the note and interest at maturity should be: (Use 360 days a year.) \bold{\text{(Use 360 days a year.) }}(Use 360 days a year.)
A) Debit Cash for $25,000; credit Notes Receivable $25,000.
B) Debit Cash $25,437.50; credit Interest Revenue $437.50; credit Notes Receivable $25,000.
C) Debit Cash $25,437.50; credit Notes Receivable for $25,437.50.
D) Debit Notes Payable $25,000; Debit Interest Expense $1,750; credit Cash $26,750.
E) Debit Cash $26,750; credit Interest Revenue $1,750,credit Notes Receivable $25,000.
Cash Loan
A sum of money borrowed that must be paid back with interest.
Interest Revenue
Earnings received from investments in interest-bearing assets like loans, bonds, and savings accounts.
Notes Receivable
Notes receivable are written promises for payments to be received, including principal and possibly interest, recognized as assets on a company's balance sheet.
- Figure out the final amount of notes receivable and handle the income from interest.
Verified Answer
$25,000 x 0.07 x (90/360) = $437.50
Jasper's journal entry would be:
Debit Cash $25,437.50
Credit Interest Revenue $437.50
Credit Notes Receivable $25,000
This entry records the collection of both the principal amount and interest earned on the note.
Learning Objectives
- Figure out the final amount of notes receivable and handle the income from interest.
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