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 $18,000 to a new tenant on a one-year note with a stated annual interest rate of 8 percent. Interest is to be received by Marketplace Mall on April 30, 2011, and at maturity on October 31, 2011.

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 Mall’s 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.)

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 $18,000 to a new tenant on a one-year note with a stated annual interest rate of 8 percent. Interest is to be received by Marketplace Mall on April 30, 2011, and at maturity on October 31, 2011.

Explanation / Answer

Journal Entries Date Particulars L/f Dr. Cr. 1/11/2010 Note Receivable A/c Dr. $18,000                       to Cash $18,000 31/12/2010 Interest Receivable A/c Dr. $240                    to Interest Revenue A/c $240 30/04/2011 Interest Receivable A/c Dr $720                to Interest Revenue A/c $480               to Cash A/c $240 31/10/2011 Cash A/c Dr. $18,000              to Account recevable A/c $18,000 Cash A/c Dr. $480           to service revenue a/c $480

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