A Company Lends a Major Client $90,000 for One Year

question 49

Multiple Choice

A company lends a major client $90,000 for one year at a 7% annual interest rate.Interest payments are to be made twice a year.In July,the company receives an interest payment for January through June.The company would record receipt of the interest payment in which of the following ways?

• A)Debit Interest Receivable for $3,150 and credit Interest Revenue for $3,150.
• B)Debit Cash for $3,150 and credit Notes Receivable for $3,150.
• C)Debit Interest Revenue for $3,150 and credit Cash for $3,150.
• D)Debit Cash for $3,150 and credit Interest Receivable for $3,150.

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Definitions:

Allowance Factor

A factor used in planning and estimation to account for potential deviations from standard conditions or expected performance.

Normal Time

The amount of time typically required to complete a process or task under normal conditions, often used in planning and scheduling.

Standard Time

The established timeframe set to complete a specific task or process under normal conditions.

Labour Standards

The established amount of time required to perform a task, based on measurements of work performance, used for planning and payroll purposes.