The Last Bank lends money to a customer on a six month note. The bank accrues...
The Last Bank lends money to a customer on a six month note. The bank accrues interest on the note at the end of the year. The journal entry would include:
Group of answer choices
a debit to Interest Receivable and a credit to Interest revenue
a debit to Interest Revenue and a credit to Interest Receivable
a debit to Cash and a credit to Interest Revenue
a debit to Cash and a credit to Interest Payable
Homework Answers
a. Debit to interest Receivable and a credit to interest Revenue.
Explanation:
Accrued interest is Revenue for bank hence it is treated as interest Revenue and amount of interest has not been recovered yet so it is recorded as interest Receivable.
Therefore journal entry would be:
Interest Receivable Account ..... Debit
Interest Revenue Account .... Credit
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