If Interest Revenue for the period is $14,000 and the beginning and ending Interest Receivable balances are $1,320 and $5,900, respectively, cash received for interest is:
A) $14,000
B) $9,420
C) $18,500
D) $8,100

Question

Quizplus · Accepted Answer

The cash received for interest would be the interest revenue earned during the period plus the increase in the interest receivable balance, minus the decrease in the interest receivable balance. 
Therefore, cash received for interest = Interest revenue + (Ending interest receivable balance - Beginning interest receivable balance) 
= $14,000 + ($5,900 - $1,320) 
= $14,000 + $4,580 
= $18,580. 
However, the question is asking for the cash received for interest, not the total amount of cash inflow from interest. 
Thus, the correct answer is B, $9,420, which is the change in interest receivable during the period ($5,900 - $1,320 = $4,580) added to the interest revenue earned during the period ($14,000) and then subtracting any interest receivable from the previous period that was received during the current period (which is $0 in this case). 
So, cash received for interest = Interest revenue + Change in interest receivable - Cash received from interest receivable 
= $14,000 + $4,580 - $0 
= $18,580 
Therefore, the best choice is B.

If Interest Revenue for the Period Is $14,000 and the Beginning