Please show work, thanks! Required information SB On June 1, 201 The following i
ID: 2571192 • Letter: P
Question
Please show work, thanks!
Required information SB On June 1, 201 The following information applies to the questions displayed below.] 8, Jensen Company acquired an. On June 1, 2018, Jensen Company acquired an 6.2%, ten-month note receivable from a customer in settlement of an existing account receivable of $180,000. Interest and principal are due at maturity. MC Qu. 165 Jensen's entry to record... Jensen's entry to record the collection of this note at maturity includes a: Multiple Choice Credit to Notes Receivable of $191,160. Credit to Interest Receivable of $2,790 Credit to Interest Receivable of $6,510 Credit to Interest Revenue of $6,510.Explanation / Answer
OPTION - C ........is the answer
When accounts are finalized on December 31,2018 we have Interest receivable raised in the books with a debit to interest receivables account . Such account will have amount of 180000 * 6.2% * 7 months / 12 months. Because from June 1st to december 31 we have 7 months expired and 3 months unexpired.
Now when the note is collected ........total amount collected ( i.e 180000 + Interest for 10 months 9300 ) 189300 shall be recorded with a debit to CASH. So the credit entry includes ...........
(1) Notes Receivable ..........180000
(2) Interest Receivable .........6510 ( this is due for 2018 but received in 2019)
(3) Interest revenue ......... 2790 ( this is due and received during 2019)
So .........select OPTION - C .......as 100% correct answer