Question

Exercise 8-12

Whispering Winds Corp. has the following transactions related to notes receivable during the last 2 months of 2019. The company does not make entries to accrue interest except at December 31.

Nov. 1		Loaned $22,800 cash to Manny Lopez on a 12 month, 10% note.
Dec. 11		Sold goods to Ralph Kremer, Inc., receiving a $56,250, 90-day, 8% note. (Omit cost of goods sold entries.)
16		Received a $47,400, 180 day, 12% note in exchange for Joe Fernetti’s outstanding accounts receivable.
31		Accrued interest revenue on all notes receivable.

a. Journalize the transactions for Whispering Winds Corp. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Use 360 days for calculation. Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

Answer 1

Journal entry

Date	account and explanation	Debit	Credit
Nov 1	Notes receivable-Manny Lopez	22800
	Cash		22800
	(To record loan given)
Dec 11	Notes receivable-Ralph Kremer Inc	56250
	Sales revenue		56250
	(To record Sales)
Dec 16	Notes receivable-Joe Fernetti	47400
	Account receivable		47400
	(To record exchange account to note)
Dec 31	Interest receivable (22800*10%*60/360+56250*8%*20/360+47400*12%*15/360)	867
	Interest revenue		867
	(To record accrued interest)

b) Journal entry

Date	account and explanation	Debit	Credit
Nov 1	Cash	25080
	Notes receivable-Manny Lopez		22800
	Interest receivable		380
	Interest revenue		1900
	(To record collection of notes)