Exercise 8-10 Elburn Supply Co. has the following transactions related to notes

Question

Exercise 8-10 Elburn Supply Co. has the following transactions related to notes receivable during the last 2 months of 2017. The company does not make entries to accrue interest except at December 31. Nov. 1 Dec. 11 16 31 Loaned $25,200 cash to Manny Lopez on a 12-month, 10% note Sold goods to Ralph Kremer, Inc., receiving a $65,250, 90-day, 8% note Received a $65,280, 180 day, 10% note in exchange for Joe Fernett's outstanding accounts receivable Accrued interest revenue on all notes receivable.

Explanation / Answer

Interest accrued on Dec 31: Lopez 420 =25200*10%/12*2 Ralph Kremer 290 =65250*8%/360*20 Joe Fernetti 272 =65280*10%/360*15 Total 982 31-Dec Interest Receivable 982       Interest Revenue 982 1-Nov Cash 27720       Interest Receivable 420       Interest Revenue 2100       Notes Receivable 25200

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