Interest Receivable

On June 1, 2014, MicroTel Enterprises lends $60,000 to MaxiDriver Inc. The loan will be repaid in 60 days with interest at 10%. Assume a 360-day year.

Required:

1. Identify and analyze the transaction on MicroTels books on June 1, 2014.

Activity	- Select your answer -OperatingInvestingFinancingCorrect 1 of Item 1
Accounts	- Select your answer -Notes Receivable Increase, Cash IncreaseNotes Receivable Increase, Cash DecreaseNotes Receivable Decrease, Cash IncreaseNotes Receivable Decrease, Cash DecreaseCorrect 2 of Item 1
Statement(s)	- Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 1

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders' Equity

Revenues

Expenses

=

Net Income

- Select your answer -Accounts PayableInterest ExpenseInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 1 of Item 2

- Select your answer -Accounts ReceivableCashInterest ExpenseInterest RevenueNotes PayableNo EntryCorrect 3 of Item 2

- Select your answer -Accounts PayableInterest ExpenseInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 6 of Item 2

- Select your answer -Accounts ReceivableCashInterest ExpenseInterest RevenueNotes PayableNo EntryCorrect 8 of Item 2

- Select your answer -Accounts ReceivableCashInterest ExpenseInterest RevenueNotes PayableNo EntryCorrect 11 of Item 2

- Select your answer -CashInterest ExpenseInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 13 of Item 2

- Select your answer -CashInterest ExpenseInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 16 of Item 2

- Select your answer -Accounts ReceivableCashInterest ExpenseInterest RevenueNotes PayableNo EntryCorrect 18 of Item 2

2. Identify and analyze the adjustment on MicroTels books on June 30, 2014.

Activity	- Select your answer -OperatingInvestingFinancingCorrect 1 of Item 3
Accounts	- Select your answer -Interest Receivable Increase, Interest Income IncreaseInterest Receivable Increase, Interest Income DecreaseInterest Receivable Decrease, Interest Income IncreaseInterest Receivable Decrease, Interest Income DecreaseCorrect 2 of Item 3
Statement(s)	- Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 3

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answer to the nearest dollar.

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders' Equity

Revenues

Expenses

=

Net Income

- Select your answer -CashInterest IncomeInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 1 of Item 4

- Select your answer -CashInterest IncomeInterest PayableNotes PayableNotes ReceivableNo EntryCorrect 3 of Item 4

- Select your answer -CashInterest IncomeInterest PayableNotes PayableNotes ReceivableNo EntryCorrect 6 of Item 4

- Select your answer -CashInterest IncomeInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 8 of Item 4

3. Identify and analyze the adjustment on MicroTels books on July 31, 2014, when MaxiDriver repays the principal and interest.

Activity	- Select your answer -OperatingInvestingFinancingCorrect 1 of Item 5
Accounts	- Select your answer -Cash Decrease, Notes Receivable Decrease, Interest Receivable Increase, Interest Income IncreaseCash Increase, Notes Receivable Increase, Interest Receivable Increase, Interest Income DecreaseCash Increase, Notes Receivable Decrease, Interest Receivable Decrease, Interest Income IncreaseCash Decrease, Notes Receivable Increase, Interest Receivable Decrease, Interest Income DecreaseCorrect 2 of Item 5
Statement(s)	- Select your answer -Balance Sheet onlyIncome Statement onlyBalance Sheet and Income StatementCorrect 3 of Item 5

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answer to the nearest dollar.

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders' Equity

Revenues

Expenses

=

Net Income

- Select your answer -CashInterest ExpenseInterest IncomePrepaid InterestNotes PayableNo EntryCorrect 1 of Item 6

- Select your answer -CashInterest ExpenseInterest PayableNotes PayableNotes ReceivableNo EntryCorrect 3 of Item 6

- Select your answer -CashInterest IncomeInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 6 of Item 6

- Select your answer -CashInterest ExpenseInterest PayableInterest ReceivableNotes PayableNo EntryCorrect 8 of Item 6

- Select your answer -Accounts PayableInterest PayableInterest ExpenseNotes PayableNotes ReceivableNo EntryCorrect 11 of Item 6

- Select your answer -CashInterest ExpenseInterest IncomePrepaid InterestNotes PayableNo EntryCorrect 13 of Item 6

- Select your answer -CashPrepaid InterestInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 16 of Item 6

- Select your answer -CashInterest ExpenseInterest PayableInterest ReceivableNotes PayableNo EntryCorrect 18 of Item 6

- Select your answer -Accounts PayableInterest ExpenseInterest PayableInterest ReceivableNotes PayableNo EntryCorrect 21 of Item 6

- Select your answer -CashInterest ExpenseInterest IncomePrepaid InterestNotes PayableNo EntryCorrect 23 of Item 6

- Select your answer -CashAccounts ReceivableInterest ReceivableNotes PayableNotes ReceivableNo EntryCorrect 26 of Item 6

- Select your answer -CashInterest ExpenseInterest PayableInterest ReceivableNotes PayableNo EntryCorrect 28 of Item 6