Question
On May 31, 2021, Deb's Inc lent $119394 to Benn Inc, accepting Benn Inc's $160000, 6 year, zero-interest-bearing note. The implicit interest is 5%which is
On May 31, 2021, Deb's Inc lent $119394 to Benn Inc, accepting Benn Inc's $160000, 6 year, zero-interest-bearing note. The implicit interest is 5%which is same as the market rate. Deb's Inc. recorded the transaction on May 31, 2021, incorrectly as; Dr Loan receivable $160000, Cr cash $119394, Cr interest income $40606
At December 31,2021, what is the required adjustment to report the correct balance of loan receivable at year end? Deb's Inc follows ASPE and uses straight line method.
- Cr 36658 to loan receivable
- Cr 32606 to loan receivable
- Cr 35939 to loan receivable
- Cr 33838 to loan receivable
- Cr 3948 to loan receivable
Step by Step Solution
There are 3 Steps involved in it
Step: 1
On May 31 2021 Debs Inc lent 119394 to Benn Inc and received a 160000 6year ze...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Accounting Principles Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
8th Canadian Edition
111950242X, 1-119-50242-5, 978-1119502425
