110 SOLID FOOTING Problem 8-3 Loan Money-Accrue Monthly Interest -Collect Intere
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110 SOLID FOOTING Problem 8-3 Loan Money-Accrue Monthly Interest -Collect Interest On July 1, 2019, MegaMoney, Inc. loaned money to ShortotCash company (SOC). MegaMoney Chapter 8 -Adusting Entries Continued had SOC sign a note for the loan. The following are the terms and other information pertaining to the loan: $750,000 1 year July 1, 2019 Amount of the loan How long the loan is for (the term of the loan).... Date the loan was made .s Date when interest will first be received by MegaMoney Sepember 30, 2019 Amount of interest earned by MegaMoney for July Amount of interest earned by MegaMoney for August$3,825 Amount of interest earned by MegaMoney for September $3,710 These are the only The following is a partial list of the accounts in MegaMoney's General Ledger. accounts you need for this problem. D Cash D Note Receivable (see below for a definition of this account) D Interest Receivable (see below for a definition of this account Interest Revenue (revenue account) D Note Receivable account- An asset account that tracks the amount owed to the entity (MegaMoney) by another company (SOC). This asset results from the entity making a loan to the other company and the other company signing a Note. The normal balance is a debit. Interest Receivable account-An asset account that tracks the amount of interest owed to the entity (MegaMoney) by another company (SOC). The normal balance is a debit Remove and use the forms on Pg 231 to complete this problem. Note: You are recording the transactions in MegaMoney's accounting system. Requirement 1 Prepare the July 1, 2019 General Journal entry to record the loan MegaMoney made to SOC. Hint: MegaMoney gave out the asset Cash. MegaMoney got in the asset Note Receivable. Requirement 2 Prepare the July 31, 2019 General Journal adjusting entry to increase the Interest Receivable account by the amount of interest MegaMoney earned on the Note Receivable for July Requirement 3 Prepare the August 31, 2019 General Journal adjusting entry to increase the Interest Receivable account by the amount of interest MegaMoney earned on the Note Receivable for August Requirement 4 Prepare the September 30, 2019 General Journal entry to record the receipt of cash by MegaMoney from SOC for the July, August, and September interest. Hint: The account names have been put in the General Journal.Explanation / Answer
Exercise 8-3 1 Date Account name Debit Credit Jul-1-19 Notes receivable 750000 Cash 750000 2 Date Account name Debit Credit Jul-31-19 Interest receivable 3825 Interest revenue 3825 3 Date Account name Debit Credit Aug-31-19 Interest receivable 3825 Interest revenue 3825 4 Date Account name Debit Credit Sep-30-19 Cash 11360 Interest receivable 7650 =3825+3825 Interest revenue 3710 Exercise 8-4 1 Date Account name Debit Credit 31-May Rent receivable 450 Rent revenue 450 2 Amount of Rent receivable on May 31,2019 = 1800+450 = $2250 3 Rent revenue on Income Statement from May 1 to May 31 = $450 4 Date Account name Debit Credit Jun-30-19 Cash 2700 Rent receivable 2250 Rent revenue 450
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