Answer:
Journal Entries:
May 22 Debit 6% Note Receivable $20,000
Credit Sales Revenue $20,000
To record the receipt of a 30-day, 6% note in payment for merchandise.
June 21 Debit Cash $100
Credit Interest Revenue $100
To record a month's interest received on the note receivable.
Debit 7% Note Receivable $20,000
Credit 6% Note Receivable $20,000
To record the renewal of the 6% note with a 7% note for 30 days.
July 21 Debit Cash $20,116.67
Credit 7% Note Receivable $20,000
Credit Interest REvenue $116.67
To record the receipt of principal and interest on the new (June 21) note.
July 28 Debit 7% Note Receivable $11,600
Credit Accounts Receivable $11,600
To record the receipt of a 45-day, 7% note in payment for accounts receivable balance.
Sept. 11 Debit Cash $1,301.50
Credit Interest Revenue $101.5
Credit 7% Note Receivable $1,200
To record the receipt of cash for note and interest.
Debit 7.5% Note Receivable $10,400
Credit 7% Note Receivable $10,400
To record the renewal of the old note for 60 days at 7.5%.
Nov. 10 Debit Cash $10,530
Credit 7.5% Note Receivable $10,400
Credit Interest Revenue $130
To record full settlement of principal and interest on the note.
Step-by-step explanation:
a) Data and Analysis:
May 22 6% Note Receivable $20,000 Sales Revenue $20,000.
June 21 Cash $100 Interest Revenue $100
7% Note Receivable $20,000 6% Note Receivable $20,000
July 21 Cash $20,116.67 7% Note Receivable $20,000 Interest REvenue $116.67
July 28 7% Note Receivable $11,600 Accounts Receivable $11,600
Sept. 11 Cash $1,301.50 Interest Revenue $101.5 7% Note Receivable $1,200
7.5% Note Receivable $10,400 7% Note Receivable $10,400
Nov. 10 Cash $10,530 7.5% Note Receivable $10,400 Interest Revenue $130