Question

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.)

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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