I NEED HELP WITH 5 I NEED HELP WITH 5 I NEED HELP WITH

I NEED HELP WITH # 5! :)

I NEED HELP WITH # 5! :)

I NEED HELP WITH # 5! :)

I NEED HELP WITH # 5! :)

4. Blue Company sold merchandise to Gray Company on November 1, 2017, for $10,000 Blue accepted a promissory note form Gray for $10,000. The note has a term of 5 months and a stated rate of interest of 7%. Blue\'s year-end is December 31, 2017. What amount should Blue recognize as interest revenue on the maturity date of the note assuming all sary adjusting entries were made at year end? B. $175 C. $292 D. $420 E. $233 5. Which of the ollowing statements is false? A. If Allowance for Doubtful Accounts has a debit balance before adjustment an error has been made in recording. B. Allowance for Doubtful Accounts has a normal balance that is a credit. C. When an accounts receivable is written off using the allowance method a company\'s current ratio will decrease D. Both A and C are false. E. All of the above statements are false.

Solution

Dear student, only one question is allowed at a time. I am answering the first question

The note was issued on November 1, 2017 and the year end was December 31, 2017. So, as adjusting entries have been passed at year end, interest for 2 months has already been recognized and interest for remaining 3 months needs to be recognized

So, interest to be recognized

= Principal x Rate x Time / 12

= $10,000 x 7% x 3 / 12

= $175

So, as per above calculations, option B is the correct option