Question

Included in Pharoah Company’s December 31 trial balance is a note receivable of $11,520. The note is a 4-month, 10% note dated October 1. Prepare Pharoah’s December 31 adjusting entry to record $288 of accrued interest, and the February 1 journal entry to record receipt of $11,904 from the borrower. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Answer 1

Pharoah Company

Journal Entries

Date Particulars Debit Credit

31 Dec Interest Receivable $288 Dr.

Interest Revenue $288 Cr

Calculation Of Interest = $ 11520 * 10 % = $ 1152

For 3 month $ 1152/12 *3= $288

To record the interest accrued

Feb 1 Cash $ 11904 Dr

Interest Receivable 384 Cr

Notes Receivable $11,520 Cr

Interest for 4 months $ 1152/12 *4= $ 384

To record the receipt of the notes receivable and the interest accrued.