t Vew Hissory Bookmarks Window Help Exercise 7.14 Note receivable [L07-7) sold s
ID: 2522103 • Letter: T
Question
t Vew Hissory Bookmarks Window Help Exercise 7.14 Note receivable [L07-7) sold some merchandise to a customer for $66,000. in payment, Esquire agreed to accept a 8% note requiring the payment of interest and principal on March 31, 2019. The 8% rate is appropriate in this situation. Required: 1. Prepare journal entries to record the December 31, 2018 interest accrual, and the March 31, 2019 collection. sale of merchandise (omit any entry that might be required for the cost of the goods sold), the 2.If the Decembor 31 adjusting entry for the interest accrual is not prepared, by how much wil income before income taxes be over-o understated in 2018 and 2019? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2018 interest accrual, and the March 31, 2019 collection. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list ournal entry worksheet Prev1 of 7Next> 5 8
Explanation / Answer
Answer to Requirement 1.
June 30, 2018 Notes Receivable 66,000
Sales 66,000
(To record Sale made and Note Receivable received)
Dec 31, 2018 Interest Receivable 2,640
Interest Revenue. 2,640
(66,000*8% * 6/12)
(To record interest revenue earned)
Mar 31,2019 Cash 69,960
Notes Receivable 66,000
Interest Receivable 2,640
Interest Revenue. 1,320
(To record payment received against Note And interest)
Answer to Requirement 2.
If interest accrued on December 31, 2018 would not have been recorded, Net income would be lesser by $2,640.
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