On July 1, 2021, MegaMoney, Inc. loaned money to ShortOfCash company (SOC). MegaMoney had SOC sign a note for the loan. The following are the terms and other information pertaining to the loan: Amount of the loan $750,000 How long the loan is for (the term of the loan) 1 year Date the loan was made July 1, 2021 September 30, 2021 Date when interest will first be received by MegaMoney Amount of interest earned by MegaMoney for July Amount of interest earned by MegaMoney for August Amount of interest earned by MegaMoney for September $3,825 $3,825 $3,710 The following is a partial list of the accounts in MegaMoney's General Ledger. These are the only accounts you need for this problem. D Cash D Note Receivable (see below for a definition of this account) D Interest Receivable (see below for a definition of this account) D Interest Revenue (revenue account) Note Receivable account - An asset account that tracks the amount owed to the entity (MegaMoney) by another company (SOC). This asset results from the entity making a loan to the other company and the other company signing a Note. The normal balance is a debit. Interest Receivable account – An asset account that tracks the amount of interest owed to the entity (MegaMoney) by another company (SOC). The normal balance is a debit.
On July 1, 2021, MegaMoney, Inc. loaned money to ShortOfCash company (SOC). MegaMoney had SOC sign a note for the loan. The following are the terms and other information pertaining to the loan: Amount of the loan $750,000 How long the loan is for (the term of the loan) 1 year Date the loan was made July 1, 2021 September 30, 2021 Date when interest will first be received by MegaMoney Amount of interest earned by MegaMoney for July Amount of interest earned by MegaMoney for August Amount of interest earned by MegaMoney for September $3,825 $3,825 $3,710 The following is a partial list of the accounts in MegaMoney's General Ledger. These are the only accounts you need for this problem. D Cash D Note Receivable (see below for a definition of this account) D Interest Receivable (see below for a definition of this account) D Interest Revenue (revenue account) Note Receivable account - An asset account that tracks the amount owed to the entity (MegaMoney) by another company (SOC). This asset results from the entity making a loan to the other company and the other company signing a Note. The normal balance is a debit. Interest Receivable account – An asset account that tracks the amount of interest owed to the entity (MegaMoney) by another company (SOC). The normal balance is a debit.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 92PSA
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