Question

Record the following transactions for Redeker Co. in the general journal. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

2017
May	1		Received a $24,000, 12 months, 10% note in exchange for Mark Chamber’s outstanding accounts receivable.
Dec.	31		Accrued interest on the Chamber note.
Dec.	31		Closed the interest revenue account.
2018
May	1		Received principal plus interest on the Chamber note. (No interest has been accrued in 2018.)

Answer 1

Date	Title	Debit	Credit
May 1, 2017	Note receivable	$ 24,000
	Accounts receivable		$ 24,000
	(To record receipt of note in exchange of accounts receivable)
Dec 31, 2017	Interest receivable ($24,000*10%*8/12)	$    1,600
	Interest revenue		$    1,600
	(To record interest accrued for the year)
Dec 31, 2017	Interest revenue	$    1,600
	Income summary		$    1,600
	(To close revenue account)
May 1, 2018	Cash	$ 26,400
	Note receivable		$ 24,000
	Interest revenue ($24,000*10%*4/12)		$        800
	Interest receivable		$    1,600
	(To record receipt of note with interest)

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