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, 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

Homework Answers

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)
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