Thank you for taking time to read and answer my question
On August 15, 2005, Benet Co. sold goods for which it received a note bearing the market rate of
interest on that date. The four-month note was dated July 15, 2005.
Note that the principal, together with all interest, is due November 15, 2005.
When the note was recorded on August 15, which of the following accounts increased?
A. Unearned discount.
B. Interest receivable.
C. Prepaid interest.
D. Interest revenue.
B. (Correct!) The note was received one month into its term. Like a bond issued between interest dates
and which collects accrued interest from the bondholder since the most recent interest payment date, this
note is recorded with interest receivable for one month. Benet earns only three months of interest revenue
because that is the length of time it will hold the note.
D. Benet has no revenue yet. Interest revenue accrues over time. The "loan" to the customer has just
begun.
------------
My question is that if interest receivable has increased (DR) what account would be (CR) since it can't be interest revenue