Question

RecRoom Equipment Company received an $8,600, six-month, 6 percent note to settle an $8,600 unpaid balance owed by a customer.

a. The note is accepted by RecRoom on November 1, causing the company to increase its Notes Receivable and decrease its Accounts Receivable.

b.	RecRoom adjusts its records for interest earned to its December 31 year-end.

c. RecRoom receives the interest on the note's maturity date.

d. RecRoom receives the principal on the note's maturity date.

Prepare journal entries to record the above transactions for RecRoom

Answer 1

	Date	Account	Debit	Credit
a	Nov.1	Notes receivable	8,600
		Accounts receivable		8,600
b	Dec.31	Interest receivable	86
		Interest revenue		86
c	April.30	Cash	258
		Interest receivable	172
		Interest revenue		430
d	April.30	Cash	8,600
		Notes receivable		8,600