On August 1, 2013, Ace Corporation accepted a note receivable in place of an outstanding accounts...
On August 1, 2013, Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965. The note is due in 90 days and has an interest rate of 8%. What would be the appropriate journal entry to record the receipt of cash at the maturity date?
Select one:
a.
|
Cash |
123,965.00 |
|
|
Notes Receivable |
123,965.00 |
b.
|
Notes Receivable |
123,965.00 |
|
|
Interest Revenue |
2,479.30 |
|
|
Cash |
126,444.30 |
c.
|
Cash |
126,444.30 |
|
|
Interest Revenue |
2,479.30 |
|
|
Notes Receivable |
123,965.00 |
d.
|
Notes Receivable |
123,965.00 |
|
|
Accounts Receivable |
123,965.00 |
Homework Answers
Answer
- Correct Answer = Option ‘c’
|
Cash |
126,444.30 |
|
|
Interest Revenue |
2,479.30 |
|
|
Notes Receivable |
123,965.00 |
Interest Revenue will be for 3 months (or 90 days) = $ 123965 x 8% x 3/12 = $ 2479.30
Cash received = 123965 + 2479.30 = $ 126444
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