Alpha Company had the following events during FY 2017: Date Event Jan. 2 Jan. 2

Question

Alpha Company had the following events during FY 2017: Date Event Jan. 2 Jan. 2 Accepted Bravo Company's 4 month, 12% note, as settlement of an outstanding $15,000 accounts receivable for goods sold in the prior year Jan. 15 Sold, $10,000 of equipment (from merchandise inventory) to Charlie Company and accepted a 9 months, 12% note. Jan. 20 Loaned Delta Company $30,000 cash and accepted a 90 days, 12% note. Apr. 20 Received payment from Delta Company. May 1 Received payment from Bravo Company. Oct. 16 Received payment from Charlie Company Jan. 15 Alpha Company uses the periodic system for inventory sales and prepares quarterly adjusting entries. Use this information to prepare the compound General Journal entries (without explanation) for all events related to the notes. Students may add the company names after the notes receivable account names to further identify the various subsidiary note transactions. Jan. 20 Calculations for any interest must be done on a standard 360 day year for notes where the term is set in days. Use whole months (or fractions thereof) for notes with term limits set in months or years. Mar. 31 Apr. 20 May 1 Sept. 30 Oct. 16

Explanation / Answer

Required journal entries are as prepared below:

Date Particulars L.F Amount ($) Amount ($) 2017 Jan-02 12% Note Receivable 15,000 Account Receivable 15,000 (For note accepted against Account Receivable) Jan-15 12% Note Receivable 10,000 Sales 10,000 (for equipment from inventory sold) Jan-20 12% Note Receivable 30,000 Cash 30,000 (for cash loaned to Delta company) Mar-31 Interest Receivable 1,400 Interest Revenue 1,400 (for interest on notes accrued) 15,000*12%*3/12 450 10,000*12%*2.5/12 250 30,000*12%*70/360 700 Apr-20 Cash 30,900 12% Note Receivable 30,000 Interest Receivable 700 Interest Revenue (30,000*12%*20/360) 200 (for cash received from Delta company) May-01 Cash 15,600 12% Note Receivable 15,000 Interest Receivable 450 Interest Revenue (15,000*12%*1/12) 150 (for cash received from Bravo company) Jun-30 Interest Receivable 10,000*12%*3/12) 300 Interest Revenue 300 (For interest accrued) Sep-30 Interest Receivable 10,000*12%*3/12) 300 Interest Revenue 300 (For interest accrued) Oct-16 Cash 10,900 12% Note Receivable 10,000 Interest Receivable 850 Interest Revenue (10,000*12%*.5/12) 50 (for cash received from Charlie company)

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