Question

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: The loan of $490,000 and acceptance of the note receivable on April 1, 2021. The adjustment for accrued interest on December 31, 2021. 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.

Answer 1

Journal entry for Shoemaker Corporation is as follows:

Date	Account and Ecxplanation	Debit ($)	Credit($)
April 1, 2021	Note Receivable	490,000
	Cash		490,000
	(Recorded the acceptance of Note Receivable )
Dec.31, 2021	Interest Receivable ($490,000 *10% *9/12)	36,750
	Interest Revenue		36,750
	(Recorded the accrued interest at the year end)
April 1, 2022	Cash	539,000
	Interest Receivable		36,750
	Interest Revenue ($490,000 *10% *3/12)		12,250
	Note Receivable		490,000
	(Recorded the collected of note with interest)