The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing:
|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.|
|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.
Account Title and Explanation
|Nov 21, 2003||Note receivable||54,000|
|Accounts receivable - McKenna Outer Wear Co.||54,000|
|Dec 31||interest receivable||420|
|Jan 20, 2004||Cash||54,630|
Interest receivable at Dec 31, 2003 = Note receivable x Interest rate x 40/360
= 54,000 x 7% x 40/360
Interest revenue on Jan 20, 2004 = Note receivable x Interest rate x 20/360
= 54,000 x 7% x 20/360
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