Question

On February 1, 2018, Sanger Corp. lends cash and accepts a $2,000 note receivable that offers 10% interest and is due in six months. What would Sanger record on August 1, 2018, when the borrower pays Sanger the correct amount owed

Answer 1

Answer:

hello your question is incomplete here is the complete question

On February 1, 2018, Sanger Corp. lends cash and accepts a $2,000 note receivable that offers 10% interest and is due in six months. What would Sanger record on August 1, 2018, when the borrower pays Sanger the correct amount owed

A. Cash 2,000  

Interest Revenue​ 100  

Notes Receivable​  2,100

B. Cash 2,100  

Notes Receivable​  2,100

C. Cash 2,100  

Interest Revenue​  100

Notes Receivable​  2,000

D. Cash 2,200  

Notes Receivable​  2,200

Answer : option c is the correct answer : cash = 2100, interest revenue = 100, notes receivable = 2000

Explanation:

The notes receivable accepted by Sanger corp from the Borrower = $2000

at an annual interest rate of : 10%

therefore the interest to be paid on the loan of $2000 per annum will be = 10% of $2000 = $200

since the loan duration is 6 months hence the interest revenue generated from the loan would be = $200 / 2 = $100

The cash to be recorded after the borrower has paid the correct amount owed would be = notes receivables + interest revenue

                                        = $2000 + $100 = $2100

therefore option C is the most accurate record

Answer 2

Answer:

Journal Entry

Cash = $2100

Interest Revenue = 100

Notes Receivable = $2000

Explanation:

We need to find the interest revenue:

$2000 X 0.10 = $200

The time interval from February to August is 6 months. Therefore we have;

Interest Revenue = $200 X (6 months/12 months) = 100.

Sanger's record on August 1 2018, would be:

Journal Entry

Cash = 2000 + 100 = $2100

Interest Revenue = 100

Notes Receivable = $2000