Husemann Co.'s assets include notes receivable from customers. During fiscal 2019, the amount of notes receivable averaged $45,700, and the interest rate of the notes averaged 9.5%. b-1. If the balance in the Interest Receivable account increased by $2,410 from the beginning to the end of the fiscal year, how much interest receivable was collected during the fiscal year

Interest receivable collected = $1931.50

Explanation:

Given:

Amount of notes receivable = $45,700

Interest rate = 9.5%

Interest Receivable account increased = $2,410

Find:

Interest receivable collected

Computation:

Interest receivable collected = [Amount of notes receivable × Interest rate] - Interest Receivable account increased

Interest receivable collected = [45,700 × 9.5%] - 2,410

Interest receivable collected = $1931.50

there are no options, but the journal entry should be:

Dr Cash 2,500

Dr Investment in bonds 350

    Cr interest revenue 2,850

Explanation:

Since the bonds' carrying value is less than the face value, it means that Gardner Company purchased them at a discount. When the bonds were purchased, the investment in bonds account's balance was not $100,000 (the par value), instead it was recorded at the lower amount at which they were purchased. As coupon payments are received, the discount on the bonds is amortized and their carrying value should increase until it reaches par value on maturity date.