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Buffalo Family Importers sold goods to Tung Decorators for $31,800 on November 1, 2020, accepting Tung’s...

Buffalo Family Importers sold goods to Tung Decorators for $31,800 on November 1, 2020, accepting Tung’s $31,800, 6-month, 6% note.

Prepare Buffalo’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

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Answer #1

Ans:

Journal entries

Date

Accounts title and Explanation

Debit

Credit

01-nov

Notes receivables

$31,800

   sales revenue

$31,800

(to record sale entry)

31-dec

Interest receivables ($31800 x 6% x 2/12)

$318

   interest revenue

$318

(to record 2 month revenue accrued)

01-may

Cash

$32,754

   interest revenue ($31800 x 6% x 4/12)

$636

   interest receivables

$318

   notes receivables

$31,800

(to record collection of interest and note amount)



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