Question

Nov. 1 Loaned $52,200 cash to C. Bohr on a 12-month, 7% note. Dec. 11 Sold goods to K. R. Pine, Inc., receiving a $1,800, 90-day, 8% note. Dec. 16 Received a $4,800, 180-day, 10% note to settle an open account from A. Murdock. Dec. 31 Accrued interest revenue on all notes receivable.

Answer 1

Dr Notes Receivable $52,200

Cr Cash $52,200

Dec. 11

Dr Notes Receivable $1,800

Cr Cash $1,800

Dec. 16

Dr Notes Receivable $4,800

Cr Accounts Receivable $4,800

Dec. 31

Dr Interest Receivable $637

Cr Interest Revenue $637

Explanation:

Preparation of the journal entries

Nov 1

Dr Notes Receivable $52,200

Cr Cash $52,200

Dec. 11

Dr Notes Receivable $1,800

Cr Cash $1,800

Dec. 16

Dr Notes Receivable $4,800

Cr Accounts Receivable $4,800

Dec. 31

Dr Interest Receivable $637

Cr Interest Revenue $637

($609+$8+$20)

Working:.

Interest Revenue

Note that 1 Nov to Dec 31st will give us 2 months

=$52,200 x 0.07 x 2/12 =$609

Note that Dec 11 to Dec 31st will give us 20 days

=$1,800 x 0.08 x 20/360 =$8

Note that Dec 16 to Dec 31st will give us 15 days

=$4,800 x 0.10 x 15/360=$20