Question

On January 1, 2017, Brenner Company purchased at face value, a $1,000, 6% bond that pays interest on January 1 and July 1. Brenner Company has a calendar year end. The entry for the receipt of interest on July 1, 2017 entails a Select one: a. debit to Interest Receivable for $60, and a credit to Interest Revenue for $60 b. debit to Cash for $30, and a credit to Interest Revenue for $30 c. debit to Cash for $60, and a credit to Interest Revenue for $60 d. debit to Interest Receivable for $30, and a credit to Interest Revenue for $30

Answer 1

b. debit to Cash for $30, and a credit to Interest Revenue for $30

Step-by-step explanation:

The journal entry is shown below:

Cash Dr

To Interest receivable

(Being the receipt of interest is recorded)

The computation is given below:

= $1,000 × 6% × 6 months ÷ 12 months

= $30

Since cash is received so we debited the cash as it increased the assets and the same time the interest receivable is credited