The following transactions took place for Smart Solutions Inc. 2014 a. July 1 Lo

Question

The following transactions took place for Smart Solutions Inc. 2014 a. July 1 Loaned $70,000 to an employee of the company and received back a one-year, 10 percent note. b. Dec. 31 Accrued interest on the note. 2015 c. July 1 Received interest on the note. (No interest has been recorded since December 31.) d. July 1 Received principal on the note.
The following transactions took place for Smart Solutions Inc. 2014 a. July 1 Loaned $70,000 to an employee of the company and received back a one-year, 10 percent note. b. Dec. 31 Accrued interest on the note. 2015 c. July 1 Received interest on the note. (No interest has been recorded since December 31.) d. July 1 Received principal on the note.
The following transactions took place for Smart Solutions Inc. 2014 a. July 1 Loaned $70,000 to an employee of the company and received back a one-year, 10 percent note. b. Dec. 31 Accrued interest on the note. 2015 c. July 1 Received interest on the note. (No interest has been recorded since December 31.) d. July 1 Received principal on the note.

Explanation / Answer

DR CR 1-Jul Note receivable 70000 Cash 70000 Dec. 31 Interest Accrude 3500 Interest income 3500 (700000*10%*6/12) 1-Jul Cash 7000 Interest Accrude 3500 Interest income 3500 1-Jul Cash 70000 Note receivable 70000

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