Question
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Feb 18, 2007, 10:13 AM
| | New Member  | | Join Date: Feb 2007
Posts: 4
| | | Journal Entry for Interest Received
I'm having problems with the Journal Entry for the following:
Thanks in advance for any assistance!
On October 1, 2005, XYZ Co. lent $48,000 to TightFit Shoes. A note was signed with principle and 10% interest to be paid on September 30, 2006.
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Answers
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Feb 18, 2007, 02:08 PM
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#2
| | | Finance & Accounting Expert
Join Date: Nov 2005 Location: Canada
Posts: 3,672
| The JE should be done for who, XYZ Co. or TightFit Shoes?
If for XYZ,
On Oct 1/05,
Dr. Notes receivable 48,000
Cr. Cash 48,000
On Sept 30/06
Dr. Cash 4,800
Cr. Interest Revenue 4,800
48,000 x .1 = 4,800
If for TightFit Shoes,
On Oct 1/05,
Dr. Cash 48,000
Cr. Notes payable 48,000
On Sept 30/06
Dr. Interest Expense 4,800
Cr. Cash 4,800
48,000 x .1 = 4,800 |
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Feb 18, 2007, 08:02 PM
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#3
| | New Member
Join Date: Feb 2007
Posts: 4
| Quote: |
Originally Posted by CaptainForest The JE should be done for who, XYZ Co. or TightFit Shoes?
If for XYZ,
On Oct 1/05,
Dr. Notes receivable 48,000
Cr. Cash 48,000
On Sept 30/06
Dr. Cash 4,800
Cr. Interest Revenue 4,800
48,000 x .1 = 4,800
If for TightFit Shoes,
On Oct 1/05,
Dr. Cash 48,000
Cr. Notes payable 48,000
On Sept 30/06
Dr. Interest Expense 4,800
Cr. Cash 4,800
48,000 x .1 = 4,800 |
CaptainForest, This request is for the XYZ Co. Thank you sooo much! | |
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Feb 18, 2007, 09:34 PM
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#4
| | | Finance & Accounting Expert
Join Date: Nov 2005 Location: Canada
Posts: 3,672
| You are welcome SJohann.
However, I misread the question, it is not just interest, put the principle to be paid back as well.
Therefore, the JE for XYZ Co. on Oct 1/05 is:
Dr. Notes receivable 48,000
Cr. Cash 48,000
And the change comes here:
On Sept 30/06
Dr. Cash 52,800 (4,800+48,000)
Cr. Interest Revenue 4,800
Cr. Notes receivable 48,000 | |
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