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Entries for Notes Receivable, Including Year-End Entries The following selected

ID: 2554601 • Letter: E

Question

Entries for Notes Receivable, Including Year-End Entries

The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing:

Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Assume a 360-day year when calculating interest. Round answers to the nearest dollar amount.

20Y3 Nov. 21. Received from McKenna Outer Wear Co., on account, a $66,000, 60-day, 10% note dated November 21 in settlement of a past due account. Dec. 31. Recorded an adjusting entry for accrued interest on the note of November 21. 20Y4 Jan. 20. Received payment of note and interest from McKenna Outer Wear Co.

Explanation / Answer

Journal entry

Date accounts & explanation Debit credit 20Y3, Nov. 21 Notes receivable 66000     Account receivable 66000 (To record notes receivable) Dec 31 Interest receivable (66000*10%*40/360) 733      Interest revenue 733 (To record accured interest) 20Y4, Jan. 20 Cash 67100      Notes receivable 66000     Interest receivable 733     Interest revenue 367 (To record amount received)