Question

Entries for Notes Receivable, Including Year-End Entries

The following selected transactions were completed by Interlocking Devices Co., a supplier of zippers for clothing:

20Y7
Dec. 7.	Received from Unitarian Clothing and Bags Co., on account, a $96,000, 60-day, 9% note dated December 7.
Dec. 31.	Recorded an adjusting entry for accrued interest on the note of December 7.
Dec. 31.	Recorded the closing entry for interest revenue.
20Y8
Feb. 5.	Received payment of note and interest from Unitarian Clothing & Bags Co.

Journalize the entries to record the transactions. Assume 360 days in a year. If an amount box does not require an entry, leave it blank. Assume February has 28 days in 2018

If required, round the interest to the nearest cent.

20Y7, Dec. 7
Dec. 31
Dec. 31
20Y8, Feb. 5

Answer 1

Date	Account Titles and Explanation	Debit	Credit
2017 Dec .7	Notes receivable - Unitarian Clothing and Bags Co	96,000
	Sales		96,000
	( Sold goods in exchange for a 60-day, 9% note)
Dec 31	Interest receivable	576
	Interest revenue		576
	(Interest accrued)
Dec 31	Interest revenue	576
	Income summary		576
	(Close Interest revenue account)
2018 Feb. 5	Cash	97,440
	Interest revenue		864
	Interest receivable		576
	Notes receivable - Unitarian Clothing and Bags Co		96,000
	(Received Payment of Note and Interest)

Calculation of interest :

==> At Dec 31 (For 24 days) = $96,000 X 9% X 24 / 360 = $576

==> At Feb 5 (For 36 days) = $96,000 X 9% X 36 / 360 = $864