M8-12 Recording Note Receivable Transactions [LO 8-3] M8-12 Recording Note Recei
ID: 2552858 • Letter: M
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M8-12 Recording Note Receivable Transactions [LO 8-3] M8-12 Recording Note Receivable Transactions [LO 8-3] ezto.mheducation.com 0.74 points M8-12 Recording Note Receivable Transactions LO 8-3] RecRom Eguiement Company received n $9,00,sik-.month, 7 percent note to sotle an $9,000 unpaid a. The note is accepted by RecRoom on November 1, causing the company to increase its Notes balance owed by a customer. Receivable and decrease its Accounts Receivable. b. RecRoom adjusts its records for interest eamed to its December 31 year-end. c. RecRoom receives the interest on the note's maturity date. d. RecRoom receives the principal on the note's maturity date. Prepare journal entries to record the above transactions for RecRoom. (If no entry is required fora transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) View transaction list Record the receipt of a note on November 1 for $9,000 to settle an outstanding accounts receivable balance of a customer Record the interest accrued on the note as of December 31. Record the receipt of the interest on the note's maturity date. Credit O Record the receipt of the payment for the full principal. 9,000 Note : journal entry has been enteredExplanation / Answer
Solution: No. Date General Journal Debit Credit 1. Nov 01 Notes Receivable 9,000 Accounts Receivable 9,000 2. Dec 31 Interest Receivable 105 Interest Revenue 105 Notes: Interest Revenue= Note face value x note rate x period expired /12 =9000 x 7% x (2/12) =105 3. April 30 Cash 315 Interest Revenue 210 Interest Receivable 105 Notes: Interest Revenue= Note face value x note rate x period expired /12 =9000 x 7% x (4/12) =210 Note: Since , note receivable is for six month from 1st November to April 30 will make 6 month , 2 months interest is already is recorded in December so balance for 4 month recorded. cash will be received is for six month = $9000 x7% x 6/12 = 315 4. April 30 Cash 9000 Notes Receivable 9000 Notes: Being principal received Please feel free to ask if anything about above solution in comment section of the question.
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