Question

Android Products, Inc., agreed to accept a $1,000, one-year, 10 percent note from C. Mate. On its maturity date of December 16, 2015, Mate honors the note by making a payment of $1,100. That payment consisted of the principal of $1,000 plus interest in the amount of $100 (computed as $1,000 x 10%). Prepare the necessary December 16 entry for Android by selecting the account names and dollar amounts from the drop-down menus.

Answer 1

Answer:

Dr Cash       $1,100

Cr Notes receivable      $1000

Cr Interest revenue         $100

Explanation:

The $1,100  receipt of cash from C.Mate comprises of $1000 principal and $100 interest revenue,the $1000 should be credited to notes receivable since it is a reduction in asset and $100 credited to interest revenue as an increase in income.

The debit would be to cash account as an increase in cash and cash equivalents in the balance sheet of Android Products Inc,under the current assets section.