Mason Company gathered the following information from its accounting records and the October bank statement to prepare the October bank reconciliation:

-Use the information above to answer the following question.What journal entry would Mason Company be required to record for the interest received from the bank?
A) debit Interest Revenue and credit Cash for $850
B) No journal entry is required because the bank is aware of the interest payment
C) debit Interest Receivable and credit Interest Revenue for $850
D) debit Cash and credit Interest Revenue for $850

Question

Mason Company gathered the following information from its accounting records and the October bank statement to prepare the October bank reconciliation:
 
-Use the information above to answer the following question.What journal entry would Mason Company be required to record for the interest received from the bank?
A) debit Interest Revenue and credit Cash for $850 
B) No journal entry is required because the bank is aware of the interest payment 
C) debit Interest Receivable and credit Interest Revenue for $850 
D) debit Cash and credit Interest Revenue for $850

Quizplus · Accepted Answer

When Mason Company receives interest from the bank, it should record it by debiting Cash (increasing the asset account) and crediting Interest Revenue (increasing the revenue account). Therefore, option D is the correct answer. Option A is incorrect because Interest Revenue should be credited, not debited. Option B is incorrect because a journal entry is required to record the interest revenue. Option C is incorrect because Interest Receivable should not be debited.

Mason Company Gathered the Following Information from Its Accounting Records