Question

The following selected transactions were completed by Interlocking Devices Co., a supplier of zippers for clothing:

2017
Dec. 7 Received from Unitarian Clothing & Bags Co., on account, a $75,000, 60-day, 3% note dated December 7.
31 Recorded an adjusting entry for accrued interest on the note of December 7.
31 Recorded the closing entry for interest revenue.
2018
Feb. 5 Received payment of note and interest from Unitarian Clothing & Bags Co.
Journalize the entries to record the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year.
CHART OF ACCOUNTSInterlocking Devices Co.General Ledger
ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable-Unitarian Clothing & Bags Co.
129 Allowance for Doubtful Accounts
131 Interest Receivable
132 Notes Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
520 Sales Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Store Equipment
523 Delivery Expense
524 Repairs Expense
529 Selling Expenses
530 Office Salaries Expense
531 Rent Expense
532 Depreciation Expense-Office Equipment
533 Insurance Expense
534 Office Supplies Expense
535 Store Supplies Expense
536 Credit Card Expense
537 Cash Short and Over
538 Bad Debt Expense
539 Miscellaneous Expense
710
Interest Expense
Journalize the entries to record the transactions for the year 2017. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
2
3
4
5
6
Journalize the entries to record the transactions for the year 2018. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
2
3
4

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Dec 7

Notes receivable $75,000

To Accounts receivable $75,000

(being note receivable is recorded)

On Dec 31

Interest receivable ($75,000 × 3% × 24 ÷ 360 days) $150

To Interest revenue $150

(Being recording of accrued interest)

On Dec 31

Interest revenue $150

To Income summary $150

(Being interest revenue is closed)

On Feb 5

Cash ($75,000 + $75,000 × 3% × 60 ÷360) 75,375

To Notes receivable $75,000

To Interest receivable $150

To Interest revenue $225 ($75,000 × 3% × 36 ÷ 360 days)

(Being collection is recorded)