Question

The following transactions took place for Smart Solutions Inc. 2014 a. July     1 Loaned $67,000 to...

The following transactions took place for Smart Solutions Inc.

2014
a. July     1

Loaned $67,000 to an employee of the company and received back a one-year, 9 percent note.
b. Dec. 31 Accrued interest on the note.
2015
c. July   1 Received interest on the note. (No interest has been recorded since December 31.)
d. July   1 Received principal on the note.

Required:

Prepare the journal entries that Smart Solutions Inc. would record for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Business   Accounting   
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Answer #1

Journal entry :

Date account and explanation debit credit
July 1 Notes receivable 67000
Cash 67000
(To record loan given)
Dec 31 Interest receivable (67000*9%*6/12) 3015
Interest revenue 3015
(To record accured revenue)
July 1 Cash 6030
Interest revenue 3015
Interest receivable 3015
(To record interest received)
July 1 Cash 67000
Notes receivable 67000
(To record principal received)
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