On January 1,a Company Lends $90,000 to a Customer for One

question 2

Multiple Choice

On January 1,a company lends $90,000 to a customer for one year at a 7% annual interest rate.The note requires the payment of interest twice each year on June 30 and December 31.The company records adjusting entries on a monthly basis.At the end of each month in which the company does not receive any interest payments,the company:

• A)records an entry with a debit to Cash of $525 and a credit to Interest Revenue of $525.
• B)records an entry with a debit to Notes Receivable of $525 and a credit to Cash of $525.
• C)records an entry with a debit to Interest Receivable of $525 and a credit to Interest Revenue of $525.
• D)does not record an adjusting entry,since no transaction has occurred.

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Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing, such as indirect materials, indirect labor, and other factory-related expenses.

Job-Order Costing

A costing method used to determine the costs associated with manufacturing products individually or in batches, tracking the direct materials, direct labor, and manufacturing overhead per job.

Process Costing

It's an accounting methodology utilized in manufacturing where costs are assigned to products based on the processes they go through, often used for homogeneous items.

Work in Process

This refers to the portion of manufactured goods that are not yet completed in the production process.