Question

Zenephia Corp. accepted a 9-month note receivable from a customer on October 1, 2019. If Zenephia has an accounting period which ends on December 31, 2019, when would it most likely recognize interest income from the note?A) December 31,2019, and june 30,2020B) October 1,2019C) December 31,2019,onlyD) June 30,2020,only

Answer 1

Answer:

A) December 31,2019, and june 30,2020

Explanation:

According to accrual the income that is realized and expenses that are accrued must be recorded. Matching concept requires that the income should be recorded in the same period in which the expenses against it incurred and recorded.

First an adjusting entry will be recorded on the year end December 31,2019 to recognize the interest income of 3 months from October to December 2019. In next period at the time of Note maturity the remaining income of 6 months from January 1, to June 30,2020.