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, 7% 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.

Answer 1

Answer :-

Date	Account titles & explanation	Debit	Credit
20Y3 Nov. 21	Notes receivable	$54,000
	To accounts receivables - McKenna Outer Wear Co		$54,000
	( To record notes receivable )
20Y3 Dec. 31	Interest receivable [ $54,000 * [ [100 - 60 ] / 360 ] * 7% ]	$ 420
	Interest revenue		$420
20Y4 Jan. 20	Cash [ $54,000 + $210 + $420 ]	$ 54,630
	Notes receivable		$420
	Interest receivable [ $54,000 [ [60 days - 40 days ] / 360 ] * 7% ]		$210
	Interest revenue		$54,000