Question

Uniform Supply accepted a $15,000, 90-day, 8% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on January 15 of the next year when the note is paid? (Assume reversing entries are not made.). (Use 360 days a year.)

Multiple ChoiceDebit Cash $15,300; credit Interest Revenue $250; credit Interest Receivable $50; credit Notes Receivable $15,000.

Debit Notes Receivable $15,000; debit Interest Receivable $300; credit Sales $15,300.

Debit Cash $15,300; credit Interest Revenue $50; credit Interest Receivable $250; credit Notes Receivable $15,000.

Debit Cash $15,300; credit Interest Revenue $300; credit Notes Receivable $15,000.

Debit Cash $15,300; credit Notes Receivable $15,300.

Answer 1

Answer- The journal entry should Uniform Supply make on January 15 of the next year when the note is paid are as follows-

Date	ACCOUNTS TITLES & EXPLANATION	DEBIT	CREDIT
		$	$
Jan. 15	Cash	15300
	Interest revenue		50
	Interest receivable		250
	Notes receivable		15000
	(Being entry recorded)

Explanation- Interest = Principal*Rate*Time

From- Jan. 1st to Jan. 15th- Interest revenue amount = $15000*8%*(15 days/360 days in a year)

= $50

From- Oct. 17th to Dec.31th – Interest receivable amount = $15000*8%*(75 days/360 days in a year)

= $250

answered by: anonymous