On July 1, 2021, MegaMoney, Inc. loaned money to ShortOfCash company (SOC). MegaMoney had SOC sign a note for the loan. The following are the terms and other information pertaining to the loan: Amount of the loan $750,000 How long the loan is for (the term of the loan) 1 year Date the loan was made July 1, 2021 September 30, 2021 Date when interest will first be received by MegaMoney Amount of interest earned by MegaMoney for July Amount of interest earned by MegaMoney for August Amount of interest earned by MegaMoney for September $3,825 $3,825 $3,710 The following is a partial list of the accounts in MegaMoney's General Ledger. These are the only accounts you need for this problem. D Cash D Note Receivable (see below for a definition of this account) D Interest Receivable (see below for a definition of this account) D Interest Revenue (revenue account) Note Receivable account - An asset account that tracks the amount owed to the entity (MegaMoney) by another company (SOC). This asset results from the entity making a loan to the other company and the other company signing a Note. The normal balance is a debit. Interest Receivable account – An asset account that tracks the amount of interest owed to the entity (MegaMoney) by another company (SOC). The normal balance is a debit.
On July 1, 2021, MegaMoney, Inc. loaned money to ShortOfCash company (SOC). MegaMoney had SOC sign a note for the loan. The following are the terms and other information pertaining to the loan: Amount of the loan $750,000 How long the loan is for (the term of the loan) 1 year Date the loan was made July 1, 2021 September 30, 2021 Date when interest will first be received by MegaMoney Amount of interest earned by MegaMoney for July Amount of interest earned by MegaMoney for August Amount of interest earned by MegaMoney for September $3,825 $3,825 $3,710 The following is a partial list of the accounts in MegaMoney's General Ledger. These are the only accounts you need for this problem. D Cash D Note Receivable (see below for a definition of this account) D Interest Receivable (see below for a definition of this account) D Interest Revenue (revenue account) Note Receivable account - An asset account that tracks the amount owed to the entity (MegaMoney) by another company (SOC). This asset results from the entity making a loan to the other company and the other company signing a Note. The normal balance is a debit. Interest Receivable account – An asset account that tracks the amount of interest owed to the entity (MegaMoney) by another company (SOC). The normal balance is a debit.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 92PSA
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Transcribed Image Text:uo montmy mterest- Ulnect iiterest
On July 1, 2021, MegaMoney, Inc. loaned money to ShortOfCash company (SOC). MegaMoney
had SOC sign a note for the loan. The following are the terms and other information pertaining to
the loan:
Amount of the loan
$750,000
How long the loan is for (the term of the loan)
1
year
Date the loan was made
July 1, 2021
September 30, 2021
$3,825
Date when interest will first be received by MegaMoney
Amount of interest earned by MegaMoney for July
Amount of interest earned by MegaMoney for August
Amount of interest earned by MegaMoney for September
$3,825
$3,710
The following is a partial list of the accounts in MegaMoney's General Ledger. These are the only
accounts you need for this problem.
D Cash
D Note Receivable (see below for a definition of this account)
D Interest Receivable (see below for a definition of this account)
D Interest Revenue (revenue account)
Note Receivable account
An asset account that tracks the amount owed to the entity
(MegaMoney) by another company (SOC). This asset results from the entity making a loan
to the other company and the other company signing a Note. The normal balance is a debit.
Interest Receivable account – An asset account that tracks the amount of interest owed to
the entity (MegaMoney) by another company (SOC). The normal balance is a debit.
Transcribed Image Text:Requirement 1 -- July 1 MegaMoney making the loan to SOC
Date
Account Name
Debit
Credit
Requirement 2 -- July 31 Interest Receivable adjusting entry
the only
Date
Account Name
Debit
Credit
Requirement 3 -- August 31 Interest Receivable adjusting entry
Date
Account Name
Debit
Credit
Requirement 4
September 30 receipt of cash by MegaMoney for July, August, and September interest
Date
Account Name
Debit
Credit
9/30/20xx
Cash
Interest Receivable
Interest Revenue
Collect July, August, and September Interest
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