Question
On September 1, Kennedy Company loaned $120,000, at 10% annual interest, to a customer. Interest and principal will be collected when the loan matures one
On September 1, Kennedy Company loaned $120,000, at 10% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?
Multiple Choice
A.)Debit Cash, $4,000; credit Interest Revenue, $4,000.
B.)Debit Interest Receivable, $12,000; credit Cash, $12,000
C.)Debit Interest Expense, $12,000; credit Interest Payable, $12,000
D.)Debit Interest Expense, $4,000; credit Interest Payable, $4,000
E.)Debit Interest Receivable, 4,000; credit Interest Revenue, $4,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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