On April 1, 2018, Shoemaker Corporation realizes that one of its main suppliers

Question

On April 1, 2018, Shoemaker Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Shoemaker's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Shoemaker agrees to lend $580,000 to its supplier using a 12-month, 10% note.

Required:

1. The loan of $580,000 and acceptance of the note receivable on April 1, 2018.
2. The adjustment for accrued interest on December 31, 2018.
3. Cash collection of the note and interest on April 1, 2019.

Record the above transactions for Shoemaker Corporation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

Journal entry worksheet

Record the note.

Note: Enter debits before credits.

Explanation / Answer

Apr-1-18 Notes receivable 580000         Cash 580000 Dec-31-18 Interest receivable 43500 =580000*10%/12*9        Interest revenue 43500 Apr-1-19 Cash 638000        Notes receivable 580000         Interest receivable 43500         Interest revenue 14500 =580000*10%/12*3

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