E8-10 Recording Note Receivable Transactions, Including Accrual Adjustment for I

Question

E8-10 Recording Note Receivable Transactions, Including Accrual Adjustment for Interest [LO 8-3] The following transactions took place for Smart Solutions Inc. 2014 a. July 1 b. Dec. 31 1 Loaned $84,000 to an employee of the company and received back a one-year, 9 percent note Accrued interest on the note 2015 c. July d. July Received interest on the note. (No interest has been recorded since December 31.) Received principal on the note 1 Required Prepare the journal entries that Smart Solutions Inc. would record for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 4 Record the receipt of a note on July 1, 2014 for a $84,000 loan to an employee Note: Enter debits before credits. Date General Journal Debit Credit Jul 01, 2014 Record entry Clear entry View general journal

Explanation / Answer

July 1, 2014 Note receivable $ 84,000 Cash $ 84,000 (To record payment of loan to employee) December 31, 2014 Interest receivable ($84,000 * 9% * 6months/12months) $    3,780 Interest revenue $    3,780 (To record interest accrued ) July 1, 2015 Cash $    7,560 Interest receivable   $    3,780 Interest revenue ($84,000 * 9% * 6months/12months) $    3,780 (To record receipt of interest) July 1, 2015 Cash $ 84,000 Note receivable $ 84,000 (To record receipt of note)

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