Question

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

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

20Y3
Nov. 21 Received from McKenna Outer Wear Co., on account, a $78,000, 60-day, 8% 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.

Journalize the entries to record the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round answers to the nearest dollar amount.

Homework Answers

Answer #1
Date Account Titles and Explanation Debit (in $) Credit (in $)
Nov -21 , 20Y3 Note Receivable $78,000
      Accounts Receivable $78,000
(To record note received)
Dec - 31 , 20Y3 Interest Receivable
($78,000 x 8% x (60 (-) 20)/360)
$693
     To Interest Revenue $693
(To record accrued interest )
Jan - 20 , 20Y4 Cash $79,040
       Note Receivable $78,000
        Interest Revenue
         ($78,000 x 8% x 20 /360)
$347
       Interest Receivable $693
(To record payment on Note and Interest)
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