Globo company accepted a $8000. Interest-bearing note receivable from a client on July 1. The note requires payment of 12% annual interest, and both the principal amount of the note and the interest will be due six months later, on Dec.31. If financial statements are prepared at the end of July, which of the following entries will Globo have to make at the end of July?

1- Interest Revenue 80
Interest Receivable 80
2- Interest Receivable 160
Interest Revenue 160
3- Interest Receivable 80
Interest Revenue 80
4- Interest Revenue 160
Interest Receivable 160

Help would be appreciated

Dell

$8,000 x .12 = $960 in interest per year

So therefore, 960/12 = $80 interest revenue/month.

The note was issued July 1, and you must prepare financial statements for the end of July (so, therefore, 1 month of interst).

Dr. Interest Receivable 80
Cr. Interest Revenue 80

The reason you debit Interest Receivable, is because you don't actually receive the cash until Dec 31

Therefore, the correct answer is (3)
Dr. Interest Receivable 80
Cr. Interest Revenue 80

Thanks for your help.