On February 1, 2015, Sanger Corp. lends cash and accepts a $2,000 note receivabl

Question

On February 1, 2015, Sanger Corp. lends cash and accepts a $2,000 note receivable that offers 10% and is due in six months. What would Sanger record on August 1, 2015, when the borrower pays Sanger the correct amount owed? Option a. Option b. Option c. Option d. When $2,500 of accounts receivable are determined to be uncollectible, which of the following should be company record to write off the accounts using the allowance method? A debit to Bad Debt Expense and a credit to Allowance for Uncollectible Accounts. A debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense. A debit to Bad Debt Expense and a credit to Accounts Receivable. A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable. Baker Fine Foods has beginning inventory for the year of $12,000. During the year, Baker purchases inventory for $150,000 and ends the year with $20,000 of inventory. Baker will report cost of goods sold equal to: $150,000. $158,000. $142,000. $170,000.

Explanation / Answer

22. Amount of interest earned in 6 months i.e. interest income = $2000 * 10% * 6/12 = $100

Total amount of cash received on maturity = principal + interest

= $2000 + $100 = $2100

The entry would be:

Cash Dr $2100

To Interest Revenue $100

To Notes Receivable $2000

Option c is correct

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