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.

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

Quote:

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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

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CaptainForest, This request is for the XYZ Co. Thank you sooo much!

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

How do I record the following entry:

Total fixed deposit (FD) interest for 2011 is 180,000
Interest will be received in 2012 is 127,000; so interest this year is 53,000.
All the interest will add principal amount.
But I have balance in FD interest receivable amounting to 51,549.33

Tq. Please help me