Required: Prepare Flipper\'s Supply Co. general journal entries for the followin

Question

Required: Prepare Flipper's Supply Co. general journal entries for the following

transactions:

Jan. 1      Accepted Flop's 120 days, 10% note, as settlement of an outstanding $15,000 account receivable for goods sold last year

Jan. 15     Purchased $10,000 Equipment from Floppy, signing a 9 month, 12% note

Jan. 25     Loaned Flam Co. $30,000 cash, accepting a 90 days, 10% note

Jan. 31     Prepared accrual adjusting entry for any interest revenue

Apr. 25     Received payment in full from Flam Co. for outstanding note & interest

May 1      Received payment in full from Flop Co. for outstanding note & interest

Oct. 15     Paid Floppy in full

Explanation / Answer

Flipper's Supply Co.

Journal

Calculation of accrued interest on Jan 31:

Flop $ 15,000 x 10% x 31/360 $129

Flam Co. $ 30,000 x 10% x 7/360 58 $187

Date Entry LF Dr Cr $ $ Jan 1 Bills Receivable a/c 15,000 Accounts Receivable a/c 15,000 Jan 15 Equipment a/c 10,000 Bills Payable a/c 10,000 Jan 25 Loan to Flam Co a/c 30,000 Cash a/c 30,000 Jan 31 Accrued Interest a/c 187 Interest revenue a/c 187 April 25 Cash a/c 30,758 To Loan to Flam Co. 30,000 To interest revenue 700 To accrued interest 58 May 1 Cash a/c 15,500 Bills Receivable 15,000 Interest revenue 371 Accrued interest 129 October 15 Bills Payable 10,000 Interest expense 900 Cash 10,900

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