Best,IncLoaned $100,000 for Three Months on November 1 to One

question 195

Multiple Choice

Best,Inc.loaned $100,000 for three months on November 1 to one of its customers at the rate of 6%.The principal amount of the loan plus interest is due on the following February 1.Which of the following is the adjusting journal entry that will be recorded on December 31?

• A)Debit Cash and credit Interest Revenue for $4,000.
• B)Debit Interest Receivable and credit Interest Revenue for $4,000.
• C)Debit Interest Receivable and credit Interest Revenue for $1,000.
• D)Debit Interest Receivable and credit Interest Revenue for $500.

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Definitions:

Perform

To carry out a task or to execute an action, especially in accordance with requirements or expectations.

Contract Formation

The process by which parties reach a mutual understanding and agreement that is legally enforceable.

Frustration

A feeling of being upset or annoyed, especially because of inability to change or achieve something, or in legal terms, the prevention of fulfilling a contract due to unforeseen events.

Clean Hands

Absence of wrongdoing on the part of a person seeking an equitable remedy.