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 \$54,000, 60-day, 7% 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.

Journal

 Date Account Title and Explanation Debit Credit Nov 21, 2003 Note receivable 54,000 Accounts receivable - McKenna Outer Wear Co. 54,000 Dec 31 interest receivable 420 Interest revenue 420 Jan 20, 2004 Cash 54,630 Interest revenue 210 interest receivable 420 Note receivable 54,000

Interest receivable at Dec 31, 2003 = Note receivable x Interest rate x 40/360

= 54,000 x 7% x 40/360

= \$420

Interest revenue on Jan 20, 2004 = Note receivable x Interest rate x 20/360

= 54,000 x 7% x 20/360

= \$210

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