Final answer:
The transactions for Oriole Company involve a note receivable from R. Stoney, accrued interest revenue, and the receipt of principal plus interest on the note. The general journal entries for these transactions are provided.
Step-by-step explanation:
The transactions for Oriole Company in 2021 are as follows:
May 1: Received a $5,200, 12-month, 6% note in exchange for an outstanding account receivable from R. Stoney.
Dec 31: Accrued interest revenue on the R. Stoney note.
May 1, 2022: Received principal plus interest on the R. Stoney note. (No interest has been accrued since December 31, 2021)
The general journal entries for these transactions would be as follows:
DateAccount Titles and ExplanationDebitCreditMay 1, 2021Notes Receivable$5,200Accounts Receivable$5,200Dec 31, 2021Interest Receivable$208Interest Revenue$208May 1, 2022Cash$5,416Notes Receivable$5,200Interest Revenue$216
The transactions for Oriole Company involve recording a note receivable, accruing interest revenue, and receiving repayment. These transactions reflect the creation of financial assets and the accrual and collection of interest similar to bank operations like Singleton Bank.
The topic involves recording transactions for Oriole Company related to a note receivable and accruing interest revenue. On May 1, 2021, Oriole Company received a $5,200, 12-month, 6% note from R. Stoney for an account receivable. Interest revenue is then accrued on December 31, 2021. On May 1, 2022, Oriole Company received the principal plus interest from R. Stoney. The transactions are expressed in journal entries that reflect the increase in assets when the note is received and the subsequent interest revenue and principal repayment.
In comparison to corporate examples, such as Singleton Bank lending $9 million to Hank’s Auto Supply, we see that loans note receivable are considered assets, which will yield interest income over time.