To attract retailers to its shopping center, the Marketplace Mall will lend mone

Question

To attract retailers to its shopping center, the Marketplace Mall will lend money to tenants under formal contracts, provided that they use it to renovate their store space. On November 1, 2010, the company loaned $100,000 to a new tenant on a one-year note with a stated annual interest rate of 6 percent. Interest is to be received by Marketplace Mall on April 30, 2011, and at maturity on October 31, 2011. Required: Prepare journal entries that Marketplace Mall would record related to this note on the following dates: (a) November 1, 2010; (b) December 31, 2010 (Marketplace Malls fiscal year-end); (c) April 30, 2011; and (d) October 31, 2011. (Round all final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Explanation / Answer

Nov 1 Dr. Note Receivable, tenants 100,000 Cr. Cash 100,000 Dec 31, Dr. Interest Receivable 1,000 Cr. Interest Revenue1,000 100,000 * 6%/12 *2=1,000 because only 2 motnhs till the end of year since the loan begin Apr Dr. Interest Receivable 5,000 Cr. Interest Revenue 5,000 Dr. Cash 6,000 Cr. Interest Receivable 60,000 Oct Cash 100,000 Notes Receivable 100,000 Dr. Cash 3,000 (Interest for only 6 months Apr to Oct) Cr. Interest Revenue 3,000

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