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At December 31 year-end, Crain Corporation has an $8,400 note receivable from a customer. Interest of 10% has accrued for 10 months on the note. What will Crain's financial statements report for this situation?a.) The balance sheet will report the note receivable of $8,400.b.) The balance sheet will report the note receivable of $8,400 and interest receivable of $700.c.) Nothing because the business has not received the cash yet.d.) The income statement will report a note receivable of $8,400.

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Answer:

B) The balance sheet will report the note receivable of $8,400 and interest receivable of $700.

Explanation:

The note receivable is an asset account that should be included in the balance sheet at face value, $8,400.

Since 8 months have passed since the note was made, we can include the interest receivable in the balance sheet, but only the 10 months: $8,400 x (10/12) x 10% = $700