Reference no: EM133069886
Question - On May 31, 2021, Deb's Inc lent $119394 to Benn Inc, accepting Benn Inc's $160000, 6 year, zero-interest-bearing note. The implicit interest is 5%which is same as the market rate. Deb's Inc. recorded the transaction on May 31, 2021, incorrectly as; Dr Loan receivable $160000, Cr cash $119394, Cr interest income $40606
At December 31, 2021, what is the required adjustment to report the correct balance of loan receivable at year end? Deb's Inc follows ASPE and uses straight line method.
-Cr 36658 to loan receivable
-Cr 32606 to loan receivable
-Cr 35939 to loan receivable
-Cr 33838 to loan receivable
-Cr 3948 to loan receivable
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