Final answer:
To complete the requested transactions, Windsor Family Importers would make a journal entry on November 1 to record the notes receivable and sales revenue. On December 31, an adjusting entry is made to account for accrued interest. Finally, on May 1, the note and full interest are recorded upon collection.
Step-by-step explanation:
You have asked for assistance in preparing journal entries for Windsor Family Importers in relation to a note received from Tung Decorators. Here is how these entries would be prepared:
November 1, 2025
On this date, Windsor Family Importers accepts a $34,800 note from Tung Decorators. The journal entry to record the note receivable would be:
Notes Receivable ........... $34,800
Sales Revenue ....................... $34,800
Windsor is debiting Notes Receivable and crediting Sales Revenue for the sale on account
December 31, 2025
The annual adjusting entry to record accrued interest on the note would be:
Interest Receivable ........... $406.00
Interest Revenue ....................... $406.00
This is calculated by taking the principal amount of the note, $34,800, multiplying it by the annual interest rate, 7%, and then prorating for 2 months (since the note was issued on November 1, and the year ends on December 31).
May 1, 2026
On this date, when the note and the total interest are due, Windsor Family Importers would make the following entry to record the collection:
Cash ................................. $35,434.00
Notes Receivable ........... $34,800.00
Interest Receivable ............... $406.00
Interest Revenue ................... $228.00
This includes the interest from December plus an additional 4 months of interest to cover the period from January 1 to May 1 (which is the additional $228).