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Notes Receivable
Asked Mar 16, 2007, 09:01 PM
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2 Answers Bernard Supply Co. Has the following transactions related to notes receivable during the last 2 months of the year. Nov. 1 Loaned $30,000 cash to T. Crew on a 1-year, 8% note. Dec. 11 Sold Goods to M.F. Hoffman, Inc., receiving a $3,600, 90-day, 12% note. Dec. 16 Received an $8,000, 6-month, 12% note to settle an open account from C. Lampe. Dec. 31 Accrued interest revenue on all noes receivable. Instructions: Journalize the transactions for Bernard Supply Co. This is what I have come up with so far: Nov.1 Notes Receivable 30,000 Accounts Receivable-T. Crew 30,000 Dec. 11 Notes Receivable 3,600 Accounts Receivable-M.F. Hoffman Inc. 3,600 Dec.16 Notes Receivable 8,000 Accounts Receivable-C. Lampe 8,000 What I need is for someone to tell me if I am doing this right so far and what I need to do at the end of the month with the interest. Thanks! |
2 Answers
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| Nov. 1 Loaned $30,000 cash to T. Crew on a 1-year, 8% note. Dr. Notes Receivable 30,000 Cr. Cash 30,000 If we are loaning someone money, we must credit cash. Dec. 11 Sold Goods to M.F. Hoffman, Inc., receiving a $3,600, 90-day, 12% note. Dr. Notes Receivable 3,600 Cr. Revenue 3,600 We made a sale, but instead of getting cash for it, we are getting a note. Dec. 16 Received an $8,000, 6-month, 12% note to settle an open account from C. Lampe. I agree with your Dec. 16 entry. Dr. NR 8,000 Cr. AR 8,000 Dec. 31 Accrued interest revenue on all notes receivable. Nov. 1 NOTE = 30,000 at 8% for 1 year. 30,000 x 0.08 x 2/12 = 400 Dec. 11 NOTE = $3,600, 90-day, 12% note. 3,600 x 0.12 x 2/12 = 72 Dec. 16 NOTE = $8,000, 6-month, 12% note 8,000 x .12 x 2/12 = 160 Adding it all up, 400+72+160 = $632 Dr. Interest Receivable 632 Cr. Interest Revenue 632 If you want, you can always break up the interest Receivable per person. | ||||
| lampposteffect (Oct 26, 2010 04:27 PM):
Two time frames were incorrect. Really close though. Source: |
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| Quote:
Change the time frame on those two equations and you should be set. | ||||
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