On October 31, 2017, Pink Inc. lent $42,000 to Zinc Inc. in return for a three-month, 3.5% interest-bearing note. What adjusting entry should Pink Inc. make on December 31, 2017, in connection with this note?
A. Debit Interest Receivable and credit Interest Revenue, $367.50.
B. Debit Cash and credit Interest Revenue, $245.
C. Debit Interest Receivable and credit Interest Revenue, $245.
D. Debit Interest Revenue and credit Interest Receivable, $122.50.
Answer:C
On October 31, 2017, Pink Inc. lent $42,000 to Zinc Inc. in return for a three-month, 3.5% interest-bearing note. What adjusting entry should Pink Inc. make on December 31, 2017, in connection with this note?
A. Debit Interest Receivable and credit Interest Revenue, $367.50. B. Debit Cash and credit Interest Revenue, $245. C. Debit Interest Receivable and credit Interest Revenue, $245. D. Debit Interest Revenue and credit Interest Receivable, $122.50.