Question

On April 1, 2021, Shoemaker Corporation realizes that one of its main suppliers is having difficulty...

On April 1, 2021, Shoemaker Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Shoemaker's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Shoemaker agrees to lend $490,000 to its supplier using a 12-month, 10% note.

Required:

  1. The loan of $490,000 and acceptance of the note receivable on April 1, 2021.

  2. The adjustment for accrued interest on December 31, 2021.

  3. Cash collection of the note and interest on April 1, 2022.

Record the above transactions for Shoemaker Corporation. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

  • Record the loan of $490,000 and acceptance of the note receivable on April 1, 2021.

Note: Enter debits before credits.
Date General Journal Debit Credit
April 01, 2021
  • Record the adjusting entry for accrued interest.

Note: Enter debits before credits.
Date General Journal Debit Credit
December 31, 2021
  • Record the cash collection.

Note: Enter debits before credits.
Date General Journal Debit Credit
April 01, 2022
Business   Accounting   
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Homework Answers

Answer #1
Date General Journal Debit Credit
April 01, 2021 Notes Receivable $   490,000
Cash $   490,000
(Being loan given to supplies)
December 31, 2021 Interest Receivable $     36,750
Interest Income $     36,750
(Being interest accrued)
April 01, 2022 Cash $   539,000
Notes Receivable $   490,000
Interest Receivable $     36,750
Interest Income $     12,250

Please note - The last entry may not be clubbed in this way. It can be posted as two separate entries. By first accruing 3 month interest and then receiving it.

Also, I have assumed there was no balance previously payable to the supplier

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