Question

Also, please explain why interest revenue and interest receivable answer is 510.

Fast Cat Running Shoes reports the following: 2016 May 6 Recorded credit card sales of $101,000, net of processor fee of 3%. Ignore Cost of Goods Sold Jul. 1 Loaned $17,000 to Tess Pinket, an executive with the company, on a one-year, 6% note. Dec. 31 Accrued interest revenue on the Pinket note. 2017 Jul. 1 Collected the maturity value of the Pinket note. Dec 31, 2016: Accrued interest revenue on the Pinket note Accounts and Explanation Debit Credit Date 2016 Dec 31 510 Interest Receivable Interest Revenue 5109

Answer 1

Answer -

Date	Accounts and Explanation	Debit	Credit
May 06, 2016	Cash ($101000 - $3030)	$97970
	Credit card expense	$3030
	Sales revenue		$101000
	(Record credit card sale and net of fee)
Jul. 01, 2016	Notes receivable-Tess Pinket	$17000
	Cash		$17000
	(Accepted notes in exchange for cash)
Dec. 31, 2016	Interest receivable	$510
	Interest revenue		$510
	(Accrued interest revenue)
Jul. 01, 2017	Cash ($17000 + $510 + $510)	$18020
	Notes receivable-Tess Pinket		$17000
	Interest receivable		$510
	Interest revenue		$510
	(Collected note receivable plus interest)

Calculation:

Calculation:

1. May 06, 2016:

Credit card expense = Credit card sales * Net of fee

= $101000 * 3%

= $3030

2. Dec. 31, 2016:

As per given information,

On Jul. 01, 2016 Tess Pinket takes a loan $17000 on a one year, 6% note

So,

Interest revenue:

From Jul. 01, 2016 to Dec. 31, 2016 (6 months)

So, Interest on note for 6 months

= $17000 * 6% * (6/12 months)

= $510

Interest revenue = $510

3. Jul. 01, 2017:

Interest revenue:

For remaining six months (Upto Jul. 01, 2017)

Therefore,

Interest on note for 6 months

= $17000 * 6% * (6/12 months)

= $510

Interest revenue = $510