Question

Generous Inc. lends Blue Inc. $40,000 on April 1 and receives a four-month, 4.5% interest-bearing note. Generous Inc. prepares financial statements on April 30. What adjusting entry should be made by Generous Inc. before its financial statements are prepared?

A) Debit Note Receivable and credit Cash for $40,000

B) Debit Interest Receivable and credit Interest Revenue for $150

C) Debit Cash and credit Interest Revenue for $150

D) Debit Interest Receivable and credit Interest Revenue for $600

Answer

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