Scarlet makes an $18,750, 120-day, 8% cash loan to Greene Co. on November 1. Scarlet's end-of-period...

Scarlet makes an $18,750, 120-day, 8% cash loan to Greene Co. on November 1. Scarlet's end-of-period adjusting entry on December 31 should be:

Group of answer choices

A) Debit Cash for $250; credit Notes Receivable $250.

B) Debit Interest Revenue $500; credit Notes Receivable $500.

C) Debit Interest Receivable $250; credit Interest Revenue $250.

D) Debit Interest Receivable $500; credit Interest Revenue $500.

E) Debit Notes Receivable $500; credit Interest Revenue $500.

Expert Solution

Dear student,

Options C is the correct answer .

There are two main points in the given problem .

first is the interest calculation ,and second is the adjustment entry .

I have given explanation on both of these points.

please find the solution in the below attached images.

Thank you.

ekkarill92 answered 1 year ago

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