Question

im having issues with the fact that it says the company ADVANCED $27,000 not lent $27,000 so would it be interest payable and interest expense or should it stay interest receivable and interest revenue?

A company has a fiscal year-end of December 31: (1) on October 1, $29,000 was paid for a one-year fire insurance policy: (2) on June 30 the company advanced its chief financial officer $27,000: principal and interest at 5% on the note are due in one year, and (3) equipment costing $77,000 was purchased at the beginning of the year for cash. Prepare journal entries for each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 3 On June 30 the company advanced its chief financial officer $27,000; principal and interest at 5% are due in one year. Note: Enter debits before credits Transaction Debit Credit General Journal Pinterest receivable Interest revenue 675

Answer 1

	Journal Entry
2)	Particulars			Debit	Credit
	Interest Receivable			$ 675.00
	To Interest Revenue				$ 675.00
	($ 27000 x 5% x 6/12)

Since the company has lent/ advanced $ 27000 to its CFO,

the company would be expecting to earn interest income

from such amount. In this case, "interest receivable"

and "interest revenue" accounts shall be used to

journalize the transaction.

"Interest Payable" and "Interest Expense" accounts

gets involved when an entity takes loan from someone.