Question

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

2017
Dec.	7	Received from Unitarian Clothing & Bags Co., on account, a $34,500, 60-day, 12% note dated December 7.
	31	Recorded an adjusting entry for accrued interest on the note of December 7.
	31	Recorded the closing entry for interest revenue.
2018
Feb.	5	Received payment of note and interest from Unitarian Clothing & Bags 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.

Answer 1

Solution:-

Date	Account titles and explanation	Debit	Credit
Dec. 7	Notes receivable	34,500
	Accounts receivable		34,500
	(Received from Unitarian Clothing & Bags Co., on account, a $34,500, 60-day, 12% note dated December 7)
Dec . 31	Interest receivable (34,500 * 12%) * (24 / 360)	276
	Interest revenue		276
	(Recorded an adjusting entry for accrued interest on the note of December 7)
Dec. 31	Interest revenue	276
	Income summary		276
	(Recorded the closing entry for interest revenue)
Feb. 5	Cash [34,500 + {(34,500 * 12%) * (60 / 360)}]	35,190
	Notes receivable		34,500
	Interest receivable		276
	Interest revenue (34,500 * 12%) * (36 / 360)		414
	(Received payment of note and interest from Unitarian Clothing & Bags Co)