need answer: Prepare the journal entries on December 31, 2013, May 11, 2014, and

Question

need answer:

Prepare the journal entries on December 31, 2013, May 11, 2014, and June 12, 2014. Malone Supply Co. has the following transactions related to notes receivable during the last 2 months of the year. The company does not make entries to accrue interest except at December 31. Nov. 1 Loaned $60,000 cash to B. Carr on a 12-month, 7% note. Dec. 11 Sold goods to R. P. Kiner, Inc., receiving a $3,600, 90-day, 8% note. 16 Received a $12,000, 180-day, 9% note to settle an open account from M. Adcock. 31 Accrued interest revenue on all notes receivable.

Explanation / Answer

Hi,

Please find the answer as follows:

November 1:

Notes Receivables Dr. 60000

Cash Cr. 60000

December 11:

Notes Receivables Dr. 3600

Sales Cr. 3600

December 16:

Notes Receivables Dr. 12000

Accounts Receivables Cr. 12000

December 31:

Interest Receivable Dr. 761

Interest Revenue Cr. 761

Interest Accrued on First Note = 60000*.07*2/12 = 700

Interest Accrued on Second Note = 3600*.08*20/360 = 16

Interest Accrued on Third Note = 12000*.09*15/360 = 45

Total Interest Accured at the end of the year = 700 + 16 + 45 = 761

Thanks.

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