Question

Husemann Co.'s assets include notes receivable from customers. During fiscal 2019, the amount of notes receivable averaged $45,100, and the interest rate of the notes averaged 8.4%.Prepare a horizontal model that accrues the interest revenue earned from the notes. (Use amounts with + for increases and amounts with – for decreases)

Balance Sheet
Assets	=		Liabilities		Stockholders’ Equity	Net income =	Revenues	-	Expenses
Cash Depreciation expense Interest receivable Interest revenue Note Receivable		$	Cash Depreciation expense Interest receivable Interest revenue Note Receivable	$			Cash Depreciation expense Interest receivable Interest revenue Note Receivable	$	Cash Depreciation expense Interest receivable Interest revenue Note Receivable	$

Answer 1

Note receivable = $45,100

Interest rate = 8.4%

Interest revenue= Note receivable x Interest rate

= 45,100 x 8.4%

= $3,788 (Rounded to whole dollar )

Balance Sheet
Assets	=		Liabilities		Stockholders’ Equity	Net income =	Revenues	-	Expenses
Interest receivable		$3,788		$			Interest revenue	$3,788		$

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