A company lends its supplier $151,000 for 3 years at a 7% annual interest rate. Interest...
A company lends its supplier $151,000 for 3 years at a 7% annual interest rate. Interest payments are to be made twice a year. The entry to record this lending transaction includes a debit to: Multiple Choice
Cash and a credit to Notes Payable for $151,000.
Notes Receivable and a credit to Cash for $151,000.
Interest Receivable and a credit to Interest Revenue for $5,285.
Cash and a credit to Interest Revenue for $10,570.
Homework Answers
Ans Notes Receivable and a credit to Cash for $151,000.
Rule of Accounting: Debit the expense, Credit the Income
Debit the receiver, Credit the giver
Debit what comes in, Credit what goes out
In the given case Cash goes out, therefore we credit cash and Notes receivable is the receiver of the cash, which is to be debited.
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