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On November 1, 2020, Victorious, Inc. lends $40,000 to one of its executives in exchange for...

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Accounting

On November 1, 2020, Victorious, Inc. lends $40,000 to one ofits executives in exchange for a 6%, 8-month note receivable.Victorious properly accrued interest on the note at its year-end,December 31, 2020. the journal entries to record the collection ofthe note principle and interest on the July 1, 2021 maturity datewill include a:

Multiple Choice

  • credit to Interest Revenue of $1,800

  • debit to Note Receivable for $40,000

  • credit to Interest Revenue of $1,600

  • debit to Cash of $1,200

  • credit to Interest Receivable for $400

Answer & Explanation Solved by verified expert
4.4 Ratings (797 Votes)

Answer:
Date Account Titles and Explanations Debit (in $ ) Credit (in $ )
Nov. 1 ,2020 Notes receivable $ 40,000
        Accounts Receivable $ 40,000
Dec. 31, 2020 Interest Receivable
( $ 40,000 x 6 % x 2/12)		 $ 400
                 Interest Revenue $ 400
July 1, 2021 Cash $ 41,600
              Notes Receivable $ 40,000
              Interest Receivable
                ( $ 40,000 x 6 % x 2/12)		 $ 400
              Interest Revenue
                ( $ 40,000 x 6 % x 6/12)		 $ 1,200
(To record the Collection of Note at Maturity )
Credit to Interest Receivable for $400
Option (e) is Correct

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