Question

On November 1, 2020, Victorious, Inc. lends $40,000 to one of its 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 of the note principle and interest on the July 1, 2021 maturity date will 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 1

	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