Your company has loaned money to an outside entity. You earned the monthly interest on the loan but have not received the payment yet. The payment is expected to be received next month. To capture the interest expected to be received in the future, you have created account #901, Interest Receivable, in your chart of accounts and booked the journal entry to DR: Interest Receivable and CR: Interest Income. While the basic journal entry was correct, your manager is questioning how you set up this new account. What needs to be corrected in the chart of accounts shown below, and how would you fix it? Teacher Feedback: Review the detail type and the account number.
Your company has loaned money to an outside entity. You earned the monthly interest on the loan but have not received the payment yet. The payment is expected to be received next month. To capture the interest expected to be received in the future, you have created account #901, Interest Receivable, in your chart of accounts and booked the journal entry to DR: Interest Receivable and CR: Interest Income. While the basic journal entry was correct, your manager is questioning how you set up this new account. What needs to be corrected in the chart of accounts shown below, and how would you fix it? Teacher Feedback: Review the detail type and the account number.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Your company has loaned money to an outside entity. You earned the monthly interest on the loan but have not received the payment yet. The payment is expected to be received next month. To capture the interest expected to be received in the future, you have created account #901, Interest Receivable, in your chart of accounts and booked the
Teacher Feedback: Review the detail type and the account number.
Transcribed Image Text:Number
Name
Туре
Detail Type
133
133 Supplies On Hand
Other Current Assets
Prepaid Expenses
135
135 Prepaid Insurance
Other Current Assets
Prepaid Expenses
136
136 Prepaid Rent
Other Current Assets
Prepaid Expenses
138
138 Other Prepaid Expenses
Other Current Assets
Prepaid Expenses
150
150 Undeposited funds
Other Current Assets
Undeposited Funds
180
180 Computer Equipment
Fixed Assets
Machinery & Equipment
182
182 Office Furniture & Equipment Fixed Assets
Machinery & Equipment
184
184 Computer Software
Fixed Assets
Fixed Asset Software
189
189 Accumulated Depreciation
Fixed Assets
Accumulated Depreciation
195
195 Security Deposit
Other Assets
Security Deposita
901
901 Interest Receivable
Other Assets
Other Long-term Assets
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