On April 3, First State Bank loaned a customer $30, 000 on a 60-day, 10% note, remitting the face value less the interest to the customer.Which of the following journal entries would First State Bank use to record the receipt of the note?A) Notes Receivable 30 , 000 Interest Revenue 3 , 000 Cash 27 , 000 \begin{array}{lc} ext { Notes Receivable } & 30,000 \ ext { Interest Revenue } & 3,000 \ ext { Cash } & 27,000\end{array} Notes Receivable Interest Revenue Cash 30 , 000 3 , 000 27 , 000 B) Notes Receivable 30 , 000 Cash 30 , 000 \begin{array}{lc} ext { Notes Receivable } & 30,000 \ ext { Cash } & 30,000\end{array} Notes Receivable Cash 30 , 000 30 , 000 C) Notes Receivable 30 , 500 Interest Revenue 500 Cash 30 , 000 \begin{array}{lc} ext { Notes Receivable } & 30,500 \ ext { Interest Revenue } & 500 \ ext { Cash } & 30,000\end{array} Notes Receivable Interest Revenue Cash 30 , 500 500 30 , 000 D) Notes Receivable 30 , 000 Interest Revenue 500 Cash 29 , 500 \begin{array}{lc} ext { Notes Receivable } & 30,000 \ ext { Interest Revenue } & 500 \ ext { Cash } & 29,500\end{array} Notes Receivable Interest Revenue Cash 30 , 000 500 29 , 500

Question

On April 3, First State Bank loaned a customer $30, 000 on a 60-day, 10% note, remitting the face value less the interest to the customer.Which of the following journal entries would First State Bank use to record the receipt of the note?A)  Notes Receivable  30 , 000  Interest Revenue  3 , 000  Cash  27 , 000 \begin{array}{lc}	ext { Notes Receivable }  &  30,000 \	ext { Interest Revenue }  &  3,000 \	ext { Cash }  &  27,000\end{array}  Notes Receivable   Interest Revenue   Cash  ​ 30 , 000 3 , 000 27 , 000 ​ B)  Notes Receivable  30 , 000  Cash  30 , 000 \begin{array}{lc}	ext { Notes Receivable }  &  30,000 \	ext { Cash }  &  30,000\end{array}  Notes Receivable   Cash  ​ 30 , 000 30 , 000 ​ C)  Notes Receivable  30 , 500  Interest Revenue  500  Cash  30 , 000 \begin{array}{lc}	ext { Notes Receivable }  &  30,500 \	ext { Interest Revenue }  &  500 \	ext { Cash }  &  30,000\end{array}  Notes Receivable   Interest Revenue   Cash  ​ 30 , 500 500 30 , 000 ​ D)  Notes Receivable  30 , 000  Interest Revenue  500  Cash  29 , 500 \begin{array}{lc}	ext { Notes Receivable }  &  30,000 \	ext { Interest Revenue }  &  500 \	ext { Cash }  &  29,500\end{array}  Notes Receivable   Interest Revenue   Cash  ​ 30 , 000 500 29 , 500 ​

Luciana Reichel · Accepted Answer

Final Answer : D, Explanation :   The correct entry is D because the bank loans $30,000 at 10% interest for 60 days. The interest is calculated as   30 , 000 × 10 % × 60 365 30,000 	imes 10\% 	imes \frac{60}{365} 30 , 000 × 10% × 365 60 ​   = $500. The bank remits $29,500 to the customer, keeping $500 as interest revenue upfront.

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