Chapter 7 HW E7-39B accounting for notes receivable. Professional Enterprises se
ID: 2399027 • Letter: C
Question
Chapter 7 HW E7-39B accounting for notes receivable.
Professional Enterprises sells on account. When a customer account becomes four months old, Professional converts the account to a note receivable. During 2010, Professional completed these transactions:
March 29 Sold goods on account to Montclair, Inc., $21,000
August 1 received a $21,000, 60 day, 5% note from Montclair, Inc., in satisfaction of its past due account receivable.
Sep. 30 collected the Montclair, Inc., note at maturity.
Requirement
Record the transactions in Professional Enterprises’ journal.
Explanation / Answer
Journal entries
Date
General journal
Debit
Credit
29-Mar
Accounts Receivables
$ 21,000.00
Sales Revenue
$ 21,000.00
(Goods sold)
1-Aug
Notes receivable
$ 21,000.00
Accounts receivables
$ 21,000.00
(Note received against accounts receivables)
30-Aug
Interest receivable
$ 87.50
Interest Income
$ 87.50
(Interest for 1 month Receivable on Note Receivable)
30-Sep
Cash
$ 21,175.00
Notes Receivable
$ 21,000.00
Interest Receivable
$ 87.50
Interest Income
$ 87.50
(Interest earned for 2 month received along with note value)
Journal entries
Date
General journal
Debit
Credit
29-Mar
Accounts Receivables
$ 21,000.00
Sales Revenue
$ 21,000.00
(Goods sold)
1-Aug
Notes receivable
$ 21,000.00
Accounts receivables
$ 21,000.00
(Note received against accounts receivables)
30-Aug
Interest receivable
$ 87.50
Interest Income
$ 87.50
(Interest for 1 month Receivable on Note Receivable)
30-Sep
Cash
$ 21,175.00
Notes Receivable
$ 21,000.00
Interest Receivable
$ 87.50
Interest Income
$ 87.50
(Interest earned for 2 month received along with note value)
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