Practice Exercise 2 Practice Exercise 2 Elburn Supply Co. has the following tran

Question

Practice Exercise 2

Practice Exercise 2

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 Loaned $22,800 cash to Manny Lopez on a 12-month, 10% note. Dec. 11 Sold goods to Ralph Kremer, Inc., receiving a $56,250, 90-day, 8% note. 16 Received a $47,400, 180 day, 12% note in exchange for Joe Fernetti’s outstanding accounts receivable. 31 Accrued interest revenue on all notes receivable.

Explanation / Answer

Journal entry :

Date Accounts & explanation debit credit Nov 1 Notes receivable- Manny Lopez 22800 Cash 22800 (To record loan given) Dec 11 Notes receivable-Ralph Kremer Inc 56250 Sales revenue 56250 (To record Sales) Dec 16 Notes receivable-Joe Fernetti's 47400 Account receivable 47400 (To record exchange of account receivable) Dec 31 Interest receivable 867 Interest revenue 867 (To record accured interest)

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