JAT Corp.loaned $375,000 for three years to a major supplier on July 1,2015.The note stipulated 10% interest to be paid annually each June 30.Since this was an unusual transaction,no one billed the supplier for the interest in 2016 or recorded the accrued interest at the year end (December).On March 1,2017,after the 2016 books were closed,the CFO found the error.Which one of the following is the correct journal entry to correct the errors thru March 1,2017? (Ignore income taxes.)
A)Since it has not been billed,no entry should be made until June 30,2017.
B) Retained Earnings-Prior Period Adjustment 56,250
C) Interest Revenue 6,250 Retained Earnings-Prior Period Adjustment 56,250
D) Interest Revenue 56,250

Question

JAT Corp.loaned $375,000 for three years to a major supplier on July 1,2015.The note stipulated 10% interest to be paid annually each June 30.Since this was an unusual transaction,no one billed the supplier for the interest in 2016 or recorded the accrued interest at the year end (December).On March 1,2017,after the 2016 books were closed,the CFO found the error.Which one of the following is the correct journal entry to correct the errors thru March 1,2017? (Ignore income taxes.)
A)Since it has not been billed,no entry should be made until June 30,2017. 
B) Retained Earnings-Prior Period Adjustment 56,250 
C) Interest Revenue 6,250 Retained Earnings-Prior Period Adjustment 56,250 
D) Interest Revenue 56,250

Quizplus · Accepted Answer

The Answer of JAT Corp.loaned $375,000 for three years to a major supplier on July 1,2015.The note stipulated 10% interest to be paid annually each June 30.Since this was an unusual transaction,no one billed the supplier for the interest in 2016 or recorded the accrued interest at the year end (December).On March 1,2017,after the 2016 books were closed,the CFO found the error.Which one of the following is the correct journal entry to correct the errors thru March 1,2017? (Ignore income taxes.)
A)Since it has not been billed,no entry should be made until June 30,2017. 
B) Retained Earnings-Prior Period Adjustment 56,250 
C) Interest Revenue 6,250 Retained Earnings-Prior Period Adjustment 56,250 
D) Interest Revenue 56,250

JAT Corploaned $375,000 for Three Years to a Major Supplier on on July