Please complete the journal entry\'s and show calculations in doing so. October

Question

Please complete the journal entry's and show calculations in doing so.

October 1, 2015. As payment Bean Company accepts a note of $89,000. The note is due on October 1, 2017. The interest rate stated in the note is 3%. The market rate of interest for similar risk notes is 8%. Assume The Bean Company makes a sale with an invoice price of $89,000. This sale occurs on annual interest (annual compounding). Required: Prepare the journal entries for Bean Company for October 1, 2015, December 31, 2015 (the company’s year-end), October 1, 2016, and December 31, 2016.

Explanation / Answer

journal 2015 1-Oct Notes receivable 89000 To accounts receivable $89,000.00 31-Dec Interest receivable 750    To interest revenue 750 2016 1-Oct Interest receivable 2250 To interest revenue 2250 1-Oct cash 3000 To interest receivable 3000 31-Dec Interest receivable 750    To interest revenue 750

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