A company lends a major client $90,000 for one year at a 7% annual interest rate.Interest payments are to be made twice a year,and interest is accrued monthly.In July,the company receives an interest payment for January through June.The company would record receipt of the interest payment in which of the following ways?
A)Debit Interest Receivable for $3,150 and credit Interest Revenue for $3,150.
B)Debit Cash for $3,150 and credit Notes Receivable for $3,150.
C)Debit Interest Revenue for $3,150 and credit Cash for $3,150.
D)Debit Cash for $3,150 and credit Interest Receivable for $3,150.

Question

Quizplus · Accepted Answer

The company would record the receipt of the interest payment by debiting Cash for $3,150 (the amount received) and crediting Interest Receivable for $3,150, as the interest was accrued monthly and now is being received.

A Company Lends a Major Client $90,000 for One Year