Question

On December 1, 2015, a company lends a new employee $20,000 to assist with her relocation expenses. The employee signs a 6-month note, with interest of 9%. The company prepares year-end financial statements at December 31. What is the required adjusting entry at December 31 as a result of this note transaction?

A) Debit Interest Revenue and credit Interest Receivable for $900

B) Debit Interest Receivable and credit Interest Revenue for $900

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

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

Answer

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