Samberg Inc. had the following transactions a. Oct. 1 - Sold $25,000 of merchand

Question

Samberg Inc. had the following transactions a. Oct. 1 - Sold $25,000 of merchandise on account, 1/10, n/30 to McCormick Industries b. Nov. 1-Received a $25,000, 90-day, 11% note from McCormick Industries to settle its $25,000 unpaid balance c. Dec. 31 -Accrued interest on the note d. Jan. 31 - Received the interest on the note's maturity date e. Jan. 31 - Received the principal on the note's maturity date Required: Prepare the required journal entries. (Round your answer to the nearest whole dollar amount. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list View journal entry worksheet Date General Journal Debit Credit Oct 01 No Transaction Recorded 2 Nov 01No Transaction Recorded 3 Dec 31No Transaction Recorded Jan 31 No Transaction Recorded 5 Jan 31 No Transaction Recorded

Explanation / Answer

Required Journal Entries for Samberg Inc. is shown as follows:-

  Samberg Inc.

Journal Entries (Amount in $)

Working Note:-

1) On december 31, 61 days has been passed since the receipt of note (from November 1 to December 31). Therefore the interest is accrued for 61 days on the amount of $25,000 at the rate of 11% on December 31.

2) Total Interest of $678 will be received for 90 days on the matuarity of note out of which $460 is accrued already. Therefore cash account is debited with $678, accrued Interest is credited with $460 and Interest revenue is credited with the balance amount of $218 ($678 - $460).

No. Date General Journal Debit Credit a. Oct 1 Accounts Receivable 25,000 Sales Revenue 25,000 (To record the merchandise sold on account) b. Nov. 1 Notes Receivable 25,000 Accounts Receivable 25,000 (To record the note received from accounts receivable) c. Dec. 31 Accrued Interest 460 Interest Revenue [$25,000*11%*(61/365)] 460 (To record the accrued interest on note) d. Jan. 31 Cash [$25,000*11%*(90/365)] 678 Interest Revenue (678 - 460) 218 Accrued Interest 460 (To record the interest received on note) e. Jan. 31 Cash 25,000 Notes Receivable 25,000 (To record the principal received on note)

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