Question

Non-interest-bearing short-term note: Use the market rate of 6%.

Milner Family Importers sold goods to Tung Decorators for $30,000 on November 1, 2017, accepting Tung’s $30,000, 6-month note. Prepare Milner’s November 1, entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.

Answer 1

Solution:

Journal Entries - Milner Family Importers
Date	Particulars	Debit	Credit
1-Nov-17	Note receivables Dr	$30,000.00
	To Sales revenue		$30,000.00
	(To record sales)
31-Dec-17	Interest receivables Dr	$300.00
	To Interest revenue		$300.00
	(To record interest revenue)
1-May-18	Cash Dr	$30,900.00
	To Note receivables		$30,000.00
	To Interest receivables		$300.00
	To Interest revenue		$600.00
	(To record collection of note at maturity)