Question

Current Attempt in Progress These transactions took place for Oriole Co. 2024 May 1 Received a $5,200,12-month, 9% note in exchange for an outstanding account receivable from R. Stoney. Dec. 31 Accrued interest revenue on the R. Stoney note. 2025 May 1 Received principal plus interest on the R. Stoney note. (No interest has been accrued since December 31,2024. ) Record the transactions in the general journal. The company does not make entries to accrue interest except at December 31. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) ournal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Answer 1

Oriole Co. transactions with R. Stoney involving a note receivable are recorded in the general journal, accurately reflecting the exchange, the accrual of interest, and the collection of principal and interest.

Step-by-step explanation:

The question involves recording financial transactions for Oriole Co. related to a note receivable and its associated interest. The transactions include receiving a $5,200 note with a 9% annual interest rate and later accruing and receiving interest revenue and principal from that note. It is important to properly record these transactions in the general journal for accurate financial reporting and analysis.

Here is how the transactions would be recorded:

1. May 1, 2024: Dr. Notes Receivable $5,200 Cr. Accounts Receivable $5,200
2. December 31, 2024: Dr. Interest Receivable $312 Cr. Interest Revenue $312
3. May 1, 2025: Dr. Cash ($5,200 + $468) Cr. Notes Receivable $5,200 Cr. Interest Receivable $312 Cr. Interest Revenue $156

These entries ensure that Oriole Co. accurately captures the economic activity of lending money and receiving interest, as well as adheres to the accrual basis of accounting where income is recorded when earned, not when received.