On January 1, 2010, Teresa Loaned $12, 000 to Another $\begin{array} { c c c } \text { Interest Receivable } & 480 \\\text { Retained Earnings } & & 480\end{array}$

question 32

Multiple Choice

On January 1, 2010, Teresa loaned $12, 000 to another company on a three-year, 4% note.No interest was accrued in 2010.Cash will not be received for the interest until the end of the three-year period.The error was discovered before adjusting and closing entries were posted on December 31, 2011.Ignoring income taxes, the correct entry on December 31, 2011, should be

• A)\(\begin{array} { c c c }
• \text { Interest Receivable } & 480 \\
• \text { Retained Earnings } & & 480
• \end{array}\)
• B)\(\begin{array} { c r }
• \text { Interest Receivable } & 960 \\
• \text { Interest Revenue } & 960
• \end{array}\)
• C)Interest Receivable \(\quad 480\)
• Interest Revenue\(\quad\quad\quad\quad 480\)
• D)\(\begin{array} { c c }
• \text { Interest Receivable } & 960 \\
• \text { Interest Revenue } & 480 \\
• \text { Retained Earnings } & 480
• \end{array}\)

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