Question

On March 1, Preston Corporation loans $3,000 to an employee and receives a 5%, three-month note. Interest will be paid when the note matures on May 31. Assuming that interest on the note has not previously been accrued, what entry will Preston make on April 30?

A) Debit Interest Revenue and credit Interest Receivable $25

B) Debit Interest Receivable and credit Interest Revenue $25

C) Debit Interest Receivable and credit Interest Revenue $50

D) Debit Cash and credit Interest Revenue for $50

Answer

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