The following transactions took place for Parker\'s Grocery. Loaned $50,000 to a

Question

The following transactions took place for Parker's Grocery. Loaned $50,000 to a cashier of the company and received back a one-year, 8 percent note, Accrued interest on the note. Received interest on the note. (No interest has been recorded since June 30.) Received principal on the note. Required: Prepare the journal entries that Parker's Grocery would record for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Explanation / Answer

Correct entries are recorded as shown below:

Date Particulars L.F Amount ($) Amount ($) Jan-01 8% Notes Receivable 50,000    Cash 50,000 (For loaned 50,000 against notes) Jun-30 Interest Receivable 2,000    Interest Revenue 2,000 (For interest accrued on the loan) 50,000*8%*6/12 Dec-31 Cash 4,000    Interest Receivable 2,000    Interest Revenue 2,000 (For interest received) 50,000*8%*6/12 Dec-31 Cash 50,000    8% Notes Receivable 50,000 (For principal amount received)

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