Question

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, 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.

CHART OF ACCOUNTSFasteners Inc. Co.General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable-McKenna Outer Wear Co.
129	Allowance for Doubtful Accounts
131	Interest Receivable
132	Notes Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

EXPENSES

510

Cost of Merchandise Sold

520

Sales Salaries Expense

521

Advertising Expense

522

Depreciation Expense-Store Equipment

523

Delivery Expense

524

Repairs Expense

529

Selling Expenses

530

Office Salaries Expense

531

Rent Expense

532

Depreciation Expense-Office Equipment

533

Insurance Expense

534

Office Supplies Expense

535

Store Supplies Expense

536

Credit Card Expense

537

Cash Short and Over

538

Bad Debt Expense

539

Miscellaneous Expense

710

Interest Expense

Journalize the entries to record the transactions for the year 20Y3. 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.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4

Journalize the entries to record the transactions for the year 20Y4. 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.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4

Answer 1

Solution:

Journal Entries- Fasteners Inc.
Date	Particulars	Debit	Credit
21-Nov-20Y3	Note Receivable Dr	$54,000
	To Accounts Receivable- Mckenna Outer Wear Co.		$54,000
	(To record note received)
31-Dec-20Y3	Interest Receivable Dr ($54,000*8%*40/360)	$480
	To Interest Revenue		$480
	(To record interest accrued till Dec 31)
20-Jan-20Y4	Cash Dr	$54,720
	To Note Receivable		$54,000
	To Interest Revenue ($54000*8%*20/360)		$240
	To Interest Receivable		$480
	(To record payment received of Note and Interest)