Barber Company Lends Monroe Company $40,000 on April 1, Accepting $\begin{array}{c}\text { Note Receivable } &40,000\\\text { Cash }&&40,000\end{array}$

Short Answer

Barber Company lends Monroe Company $40,000 on April 1, accepting a four-month, 6% interest note. Barber Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared? a. $\begin{array}{c}\text { Note Receivable } &40,000\\\text { Cash }&&40,000\end{array}$

b. $\begin{array}{c}\text {Interest Receivable } &200\\\text { Interest Revenue }&&200\end{array}$

c. $\begin{array}{c}\text {Cash } &200\\\text { Interest Revenue }&&200\end{array}$

d. $\begin{array}{c}\text {Interest Receivable } &600\\\text { Interest Revenue }&&600\end{array}$