Practice Exercise 2 Date Account Titles and Explanation Debit Credit SHOW LIST O

Question

Practice Exercise 2

Date

Account Titles and Explanation

Debit

Credit

SHOW LIST OF ACCOUNTS

Date

Account Titles and Explanation

Debit

Credit

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 $25,200 cash to Manny Lopez on a 12-month, 10% note. Dec. 11 Sold goods to Ralph Kremer, Inc., receiving a $65,250, 90-day, 8% note. 16 Received a $65,280, 180 day, 10% note in exchange for Joe Fernetti’s outstanding accounts receivable. 31 Accrued interest revenue on all notes receivable.

Explanation / Answer

PART A date account titles and explanation debit credit Nov-01 10% notes receivable 25200 cash 25200 (to record notes receivable) Dec-11 8% notes receivable 65250 sales 65250 (to record sale of goods) Dec-16 10% notes receivable 65280 accounts receivable 65280 (to record notes receivable) Dec-31 interest receivable 982 interest revenue 982 interest receivable = (25200*10%*2/12)+(65250*8%*20/360)+(65280*10%*15/360) = 982 PARTB date account titles and explanation debit credit Dec-31 Cash 27720 25200+(25200*10%) Interest Revenue 2100 (25200*10%)-(25200*10%*2/12) Interest Receivable 420 (25200*10%*2/12) Notes Receivable 25200

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