On May 31, 2021, Deb's Inc lent $119394 to Benn Inc, accepting Benn Inc's $160000, 6 year,
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Question:
On May 31, 2021, Deb's Inc lent $119394 to Benn Inc, accepting Benn Inc's $160000, 6 year, zero-interest-bearing note. The implicit interest is 5%which is same as the market rate. Deb's Inc. recorded the transaction on May 31, 2021, incorrectly as; Dr Loan receivable $160000, Cr cash $119394, Cr interest income $40606
At December 31,2021, what is the required adjustment to report the correct balance of loan receivable at year end? Deb's Inc follows ASPE and uses straight line method.
- Cr 36658 to loan receivable
- Cr 32606 to loan receivable
- Cr 35939 to loan receivable
- Cr 33838 to loan receivable
- Cr 3948 to loan receivable
Related Book For
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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