Exercise 8-10 Elburn Supply Co. has the following transactions related to notes

Question

Exercise 8-10 Elburn Supply Co. has the following transactions related to notes receivable during the last 2 months of 2017. The company does not make entries to accrue interest except at December 31. Nov. 1 Dec. 11 16 31 Loaned $30,000 cash to Manny Lopez on a 12-month, 10% note Sold goods to Ralph Kremer, Inc., receiving a $6,750, 90-day, 896 note. Received a $4,000, 180 day, 9% note in exchange for Joe Fern etti's outstanding accounts receivable. Accrued interest revenue on all notes receivable. Journalize the transactions for Elburn Supply Co. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Use 360 days for calculation. Round answers to o decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

Answer

Date

Journal

Debit

Credit

1-Nov

10% Note Receivable

           30,000

Cash

           30,000

(Being cash loaned and note received)

11-Dec

8% Note Receivable

             6,750

Sales

             6,750

(Being sales made and note received)

16-Dec

9% Note Receivable

             4,000

Accounts Receivable

             4,000

(Being note received from Accounts Receivable)

31-Dec

Interest Receivable

                 545

Interest Revenue

                 545

(Being interest due)

2018

1-Nov

Cash

           33,000

Interest Receivable ($30,000 * 10% * 10/12 Months)

                 500

Interest Revenue($30,000 * 10% * 2/12 Months)

             2,500

10% Note

           30,000

(Being 10% Note matured)

Calculation of Interest on 31st March

Interest on Nov 1, Note = ($30,000 * 10% * 2/12 Months)

= $500

Interest on Dec 11, Note = (6,750 * 8% * 20/360 Days)

= $30

Interest on Dec 16, Note = (4,000 * 9% * 15/360 Days)

= $15

Total Interest = $545 (500 + 30 + 15)

Date

Journal

Debit

Credit

1-Nov

10% Note Receivable

           30,000

Cash

           30,000

(Being cash loaned and note received)

11-Dec

8% Note Receivable

             6,750

Sales

             6,750

(Being sales made and note received)

16-Dec

9% Note Receivable

             4,000

Accounts Receivable

             4,000

(Being note received from Accounts Receivable)

31-Dec

Interest Receivable

                 545

Interest Revenue

                 545

(Being interest due)

2018

1-Nov

Cash

           33,000

Interest Receivable ($30,000 * 10% * 10/12 Months)

                 500

Interest Revenue($30,000 * 10% * 2/12 Months)

             2,500

10% Note

           30,000

(Being 10% Note matured)

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