Warner's entry to record the receipt of the July 1 interest payment would include a

A) debit to Interest Expense for $875.
B) credit to Interest Income for $875.
C) credit to Interest Income for $1,750.
D) credit to Trading Investments for $875.

Question

Donna Quinto · Accepted Answer

Final Answer : B, Explanation :  The correct entry for receiving the July 1 interest payment involves recognizing the interest income earned on the bonds. Since the bonds have a face value of $50,000 and an interest rate of 3.5%, the semi-annual interest payment is calculated as ($50,000 * 3.5%) / 2 = $875. Therefore, the entry includes a credit to Interest Income for $875, reflecting the income earned from the bond investment for the period.

Warner's entry to record the receipt of the July 1 interest payment would include a

A) debit to Interest Expense for $875.
B) credit to Interest Income for $875.
C) credit to Interest Income for $1,750.
D) credit to Trading Investments for $875.

Definitions

Learning Objectives

Learning Objectives

Related questions

Warner's entry to record the receipt of the July 1 interest payment would include aA) debit to Interest Expense for $875.B) credit to Interest Income for $875.C) credit to Interest Income for $1,750.D) credit to Trading Investments for $875.

Definitions

Learning Objectives

Learning Objectives

Related questions

Warner's entry to record the receipt of the July 1 interest payment would include a

A) debit to Interest Expense for $875.
B) credit to Interest Income for $875.
C) credit to Interest Income for $1,750.
D) credit to Trading Investments for $875.