On March 1, Terrell & Associates provides legal services to Whole Grain Bakery r

Question

On March 1, Terrell & Associates provides legal services to Whole Grain Bakery regarding some recent food poisoning complaints. Legal services total $10,200. In payment for the services, Whole Grain Bakery signs a8% note requiring the payment of the face amount and interest to Terrell & Associates on September 1 Required: For Terrell &Associates;, record the acceptance of the note receivable on March 1 and the cash collection on September 1. (If no entry is required for a transaction/event, select No journal entry required in the first account field.)

Explanation / Answer

Journal entries in the books of terrel & Associates

Date

Particulars

Debit

Credit

March 1,

8% notes receivable a/c

$10,200

To legal service revenue

$10,200

(Being note accepted for services provided recorded)

1-Sep

Cash A/c (With interest)

$10,608

To 8% notes receivables

$10,200

To interest income in notes receivable (10,200*8%*6/12)

$408

(Being cash collected along with interest recorded)

Journal entries in the books of terrel & Associates

Date

Particulars

Debit

Credit

March 1,

8% notes receivable a/c

$10,200

To legal service revenue

$10,200

(Being note accepted for services provided recorded)

1-Sep

Cash A/c (With interest)

$10,608

To 8% notes receivables

$10,200

To interest income in notes receivable (10,200*8%*6/12)

$408

(Being cash collected along with interest recorded)

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