Promissory note agreeing to repay the amount

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Reference no: EM131809415

Looking for a little bit of clarification on these latter questions :

Nicknack's annual fire insurance policy of $2,400 was paid on April 1, 2014 and was fully expensed at that time.
DR Prepaid Exp - 2400
CR Insurance EXp 2400

On June 1, 2014 Nicknacks lent a long-time employee $15,000. She signed a promissory note agreeing to repay the amount on May 31, 2017. The interest rate is 5% per year with interest payable every May 31.

Cr Cash 15,00
Dr Notes Receivable 15,000

CR Int. Rev. (15,000 x .05) (3)= 2250
Dr Int Rev. 2250 (AR)

Rent of $5,000 per month has not been paid or recorded for the last two months.

DR Rent Exp 10,000

CR AP 10,000

Reference no: EM131809415

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