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value 9.00 points Stinson Company recently agreed to loan an employee $130,000 f

ID: 2410729 • Letter: V

Question

value 9.00 points Stinson Company recently agreed to loan an employee $130,000 for the purchase of a new house. The loan was executed on May 31, 2015, and is a one-year, 5 percent note, with interest payments required on November 30.2015, and May 31, 2016. Stinson issues quarterly financial statements on March 31, June 30 September 30, and December 31 Required: 1. Prepare the journal entry that Stinson will make when the note is established. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the receipt of a note on May 31, 2015 for a $130,000 loan to an employee. Note: Enter debits before credits. Date General Journal Debit Credit May 31, 2015 Record entry Clear entry View general journal

Explanation / Answer

General Journal

Debit

Credit

Notes Receivable

130000

Cash

130000


2) Prepare the journal entries that Stinson will make to record the interest accruals at each quarter end and interest payments at each payment date.

Date

General Journal

Debit

Credit

June 30,2015

Interest Receivable

542

Interest Revenue

542

(130000 x 5% x 1/12)

Sept 30,2015

Interest Receivable

1625

Interest Revenue

1625

130000 x 5% x 3/12

Nov 30,2015

Cash

3250

Interest Revenue

1083

Interest Receivable

2167

130000 x 5% x 2/12

Dec 31, 2015

Interest Receivable

542

Interest Revenue

542

130000 x 5% x 1/12

March 31, 2015

Interest Receivable

1625

Interest Revenue

1625

130000 x 5% x 3/12


3) Prepare the journal entry that Stinson will make to record the principal payment at the maturity date.

General Journal

Debit

Credit

Cash

133250

Interest Receivable

2167

Interest Revenue

1083

Notes Receivable

130000

130000 x 5% x 2/12 = 1083


General Journal

Debit

Credit

Notes Receivable

130000

Cash

130000