Cathy Realty loaned money and received the following notes during 2008. Note Dat

Question

Cathy Realty loaned money and received the following notes during 2008.

Note     Date      Principal Amount       Interest Rate          Terms

1        Dec 23         $13,000                       9%                            1 year
2        Nov 30          12,000                        12%                          6 months
3        Dec 7            9,000                           10%                          30 days


Requirements

Journalize the entry to record the inception of the three notes and also journalize a single adjusting entry at October 31, 2010, the fiscal year end, to record and accrued interest revenue on all three notes.

Journalize the collecction of principal and interest at maturity of all three notes.

Explanation / Answer

30-Nov-10 Loan A/c                      Dr. 12000          To Bank A/c 12000 07-Dec-10 Loan A/c                      Dr. 9000          To Bank A/c 9000 23-Dec-10 Loan A/c                      Dr. 13000          To Bank A/c 13000 05-Jan-11 Bank A/c                      Dr. 9074        To loan A/c 9000        To Interest Received 74 30-May-11 Bank A/c                      Dr. 12720        To loan A/c 12000        To Interest Received 720 31-Oct-11 InterestReceived         Dr. 794 Accrued Interest         Dr. 1000           To Interest on loan 1794 31-Oct-11 Interest on Loan         Dr. 1794      To P/L A/c 1794

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