Exercise 7-22 Discounting a note receivable [LO7-8 Selkirk Company obtained a $2

Question

Exercise 7-22 Discounting a note receivable [LO7-8 Selkirk Company obtained a $21,000 note receivable from a customer on January 1, 2018. The note, along with interest at 10%, is due on July 1, 2018. On February 28, 2018, Selkirk discounted the note at Unionie Bank. The bank's discount rate is 12%. Prepare the journal entries required on February 28, 2018, to accrue interest and to record the discounting for Selkirk. Assume that the discounting is accounted for as a sale. (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 accrued interest earned Nobe: Enter debits before credts February 28. 2018

Explanation / Answer

Journal Entry Account Tittle Debit Credit Cash account ( 21000-(21000*12%*4/12)) $20,160.00 Interest Expense account 660 $840.00 To Note Receivable $21,000.00 ( Being note receivable sold )

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