On October 1, 2017, Xerox Equipment Inc. sold specialized office equipment to Be

Question

On October 1, 2017, Xerox Equipment Inc. sold specialized office equipment to Bellamy Co. and received a 2-year, $120,000 8% note in lieu of cash. Interest is received annually on the note on October 1 and Xerox financial year ends December 31. Round to nearest whole number. Fill in the necessary information identified by the numbering to complete the journal entries at the given dates.

a.     October 1, 2017

I

III

II

III

           

           

I  

            II  

            III  

December 31st 2017

I

III

II

III

I -

II -

III -

October 1st 2018

I

III

II

IV

Interest revenue

V

I -

II -

III -

IV -

V –

I

III

II

III

Explanation / Answer

Journal entry :

Date account and explanation debit credit Oct 1,2017 Notes receivable 120000 Office equipment 120000 (To record office equipment sold) dec 31,2017 Interest receivable (120000*8%*3/12) 2400 Interest revenue 2400 (To record accured interest revenue) Oct 1, 2018 Cash (120000*8%) 9600 Interest receivable 2400 Interest revenue (120000*8%*9/12) 7200 (To record interest received)

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