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On August​ 31, 2018​, Brandy Tuttle borrowed $ 7,000 from Darwin State Bank. Tuttle signed a...

On August​ 31, 2018​, Brandy Tuttle borrowed $ 7,000 from Darwin State Bank. Tuttle signed a note​ payable, promising to pay the bank principal plus interest on August​ 31, 2019. The interest rate on the note is 12​%. The accounting year of Darwin State Bank ends on June​ 30, 2019. Journalize Darwin State​ Bank's (a) lending money on the note receivable at August​ 31, 2018​, ​(b) accrual of interest at June​ 30, 2019​, and​ (c) collection of principal and interest at August​ 31, 2019​, the maturity date of the note. Journalize Darwin State​ Bank's (a) lending money on the note receivable at August​ 31, 2018​, ​(b) accrual of interest at June​ 30, 2019​, and​ (c) collection of principal and interest at August​ 31, 2019​, the maturity date of the note. ​(Record debits​ first, then credits. Exclude explanations from any journal entries. Check your spelling carefully and do not abbreviate. Do not use hyphens or dashes in any account names​.) ​(a) Prepare the journal entry for the issuance of the note receivable on August​ 31, 2018.

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Answer #1
Date Account Debit Credit
31-Aug-18 Loan to tuttle $7,000
Cash $7,000
(Being loan given to tuttle against receivables note)
30-Jun-19 Accrued Interest on loan $700
Interest Income $700
(Being interest accrued for the 10 months)
31-Aug-19 Accrued Interest on loan $140
Interest Income $140
(Being interest accrued for the 2 months)
31-Aug-19 Cash $7,840
Loan to tuttle $7,000
Accrued Interest on loan $840
(Being repayment of loan issued along with accrued interest)

Accrued Interest as on 30-Jun-19 = 7000*12%*10/12 = $700

Accrued Interest for the 2 months = 7000*12%*2/12 = $140

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