Problem
On October 1 of Year 1, Della Company made a cash loan to another company. The interest rate on the loan is 13%. No cash payments will be collected on the loan until September 30 of Year 2. Which debit or credit is correctly included in the ADJUSTING journal entry necessary on Della's books (the LENDER) on December 31 of Year 1 with respect to this loan?
a) CREDIT to Interest Revenue
b) DEBIT to Interest Revenue
c) DEBIT to Interest Expense
d) CREDIT to Interest Expense
e) CREDIT to Cash.