Orosco Supply Co. has the following transactions related to notes receivable dur

Question

Orosco Supply Co. has the following transactions related to notes receivable during the
last 2 months of 2011.
Nov. 1 Loaned $15,000 cash to Sally Givens on a 1-year, 10% note.
Dec. 11 Sold goods to John Countryman, Inc., receiving a $6,750, 90-day, 8% note.
Dec. 16 Received a $4,000, 6-month, 9% note in exchange for Bob Reber’s outstanding
accounts receivable.
Dec. 31 Accrued interest revenue on all notes receivable.

Instructions:

(a) Journalize the transactions for Orosco Supply Co.

(b) Record the collection of the Givens note at its maturity in 2012.

Explanation / Answer

x.X. 11: Loaned $15,000 cash to Sally Givens on a 1-year, 10% note. ================================================= Nov. 11, 2011 10% Notes Receivable $15,000 Cash $15,000 Loaned $15,000 to Sally, received 10% note due 1 year. Dec. 11: Sold goods to John Countryman, Inc., receiving a $6,750,90-day, 8% note. =========================================================== Dec. 11, 2011 8% Notes Receivable $6,750 Sales $6,750 Sold goods to John Countryman, received 8% note due 90 days. Dec. 16: Receive a $4,000, 6-month, 9% note in exchange for Bob Reber's outstanding accounts receivable. =========================================================== Dec. 11, 2011 9% Notes Receivable $4,000 Accounts Receivables $4,000 Recevive 9% note due 6 months against Bob Reber's accounts. 31: Accrued interest revenue on all notes receivable. ================================= Dec. 11, 2011 Interest Receivables $250 Interest Income $250 Accrued Interest on notes: 10% Note $15,000 x 10% x 50 days(Nov 19 + Dec 31) / 365 = $205 8% Note $6,750 x 8% x 20 days(Dec. 20) / 365 = $ 30 9% Note $4,000 x 9% x 15 days(Dec. 16) / 365 = $ 15 b) Record the collection of the Givens note at its maturity in 2012. =========================================== March 11,2011 Cash $6,883 &nbõnex.Xivables $ 30 Interest Income $103 8% Notes Receivables $6,750 Received proceeds of 8% notes $6,750 x 8% x 90 days/365 _____________________________________________________________________________________ June 16, 2011 Cash $4,177 Interest Receivables $ 15 Interest Income $162 9% Notes Receivables $4,000 Received proceeds of 9% notes $4,000 x 9% x 180 days/365 _______________________________________________________________________________________ Nov. 11, 2011 Cash $4,177 Interest Receivables $ 205 Interest Income $1,295 9% Notes Receivables $15,000 Received proceeds of 9% notes $15,000 x 10% x 1 year

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