Question

Martin Distributors has the following transactions related to notes receivable during the last two months of the year.

Dec. 1 Loaned $16,000 cash to E. Kinder on a 1-year, 6% note.
16 Sold goods to J. Jones, receiving a $4,800, 60-day, 7% note.
31 Accrued interest revenue on all notes receivable.
Instructions:
Journalize the transactions for Trent Distributors.

Answer 1

Dec. 1

Note Receivable : E. Kinder $16,000 (debit)

Cash $16,000 (credit)

Dec. 16

Note Receivable : J. Jones $4,800 (debit)

Sales $4,800 (credit)

Dec. 31

Note Receivable : E. Kinder $80 (debit)

Note Receivable : J. Jones $168 (debit)

Interest Income $248 (credit)

Step-by-step explanation:

Interest accruing on E. Kinder`s Note Receivable = $16,000 × 6 % × 1/12 = $80.

Interest accruing on J. Jones`s Note Receivable = $4,800 × 7 % × 30/60= $168.