Timothy Company sold merchandise to a customer on October 17 of 2004. They accepted a $4,800, 90-day, 10% note as payment. If Timothy Company's accounting period ends on December 31, 2004 [Oct 17 to Dec 31 = 75 days], Timothy Company's journal entry on January 15 ( when the note plus interest is received ) will include:

a. Credit to Interest Revenue for $120

b. Credit to Interest Revenue for $480

c. Credit to Interest Receivable for $20

d. Credit to Interest Receivable for $100

e. Debit to Cash for $5,280

I am guessing you are given an annualized rate of 10%, and the period of the loan is only 90 days.  When you determine the interest owed during the 75 days then, you would need to do: 4800*0.10*(75/360) which is equal to 100.  Your entries would then be modified to look like:

360 days in a year is the convention typically used to determine these types of questions.

Oct 17 Note Receivable (D) 4,800

Revenue (C) 4,800

Dec 31 Interest Receivable (D) 100

Interest Revenue (C) 100

Jan 15 Cash (D)4,920

Interest Receivable (C) 100

Interest Revenue (C) 20

Note Receivable (C) 4,800

Explanation:

typically a loft will include modern kitchen and bathrooms, this increases the price tag. lofts also have a good amount of open space, this requires more heating and electricity. lofts are also in older buildings, this means that maintaining the location increases the bill. keep in mind this is without talking about the high state and property taxes.

i hope this you! : )

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