Interest Receivable On June 1, 2014, MicroTel Enterprises lends $60,000 to MaxiDriver Inc. The loan will be repaid in 60 days with interest at 10%. Assume a 360-day year. Required: 1. Identify and analyze the transaction on MicroTel’s books on June 1, 2014. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select “No Entry” and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenues – Expenses = Net Income 2. Identify and analyze the adjustment on MicroTel’s books on June 30, 2014. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select “No Entry” and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answer to the nearest dollar. Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenues – Expenses = Net Income 3. Identify and analyze the adjustment on MicroTel’s books on July 31, 2014, when MaxiDriver repays the principal and interest. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select “No Entry” and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Do not round intermediate calculations. If required, round your final answer to the nearest dollar. Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenues – Expenses = Net Income
Answer:
June -1
| Date | Description | Debit $ | Credit $ |
| 1-Jun | Loan Receivable | 60,000 | |
| Cash | 60000 | ||
| ( Being entry for Loan Receivable) |
| Balance sheet | ||||||
| Liabelity | Shareholder Equity |
= | Recivable | Cash | ||
| 1-Jun | 600,000 | -60000 | ||||
For this transaction no effect on the income statement
June-30
| Date | Description | Debit $ | Credit $ |
| 1-Jun | Interest Receivable | 500 | |
| Interest Income | 500 | ||
| ( Being entry for interest income) |
| Balance sheet | ||||||
| Liability | Shareholder Equity |
income | = | Receivable | Cash | |
| 1-Jun | 500 | 500 | ||||
Here income statement will increase by 500 as interest income and balance sheet receivable also increase by 500
July 31
| Date | Description | Debit $ | Credit $ |
| 1-Jun | Cash | 61,000 | |
| Loan Receivable | 60000 | ||
| Interest Receivable | 500 | ||
| Interest Income | 500 |
| Balance sheet | ||||||
| Liability | Shareholder Equity |
income | = | Receivable | Cash | |
| 1-Jun | 500 | -60,000 | 61000 | |||
| -500 | ||||||
