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Waterway Family Importers sold goods to Tung Decorators for $44,400 on November 1, 2020, accepting Tung’s...

Waterway Family Importers sold goods to Tung Decorators for $44,400 on November 1, 2020, accepting Tung’s $44,400, 6-month, 6% note.

Prepare Waterway’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.

(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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Answer #1

Journal

Date

Account Title and Explanation

Debit

Credit
Nov. 1, 2020 Note receivable 44,400
Sales 44,400
Dec 31, 2020 Interest receivable 444
Interest revenue 444
May 1, 2021 Cash 45,732
Interest receivable 444
Interest revenue 888
Note receivable 44,400

Interest revenue on Dec 31, 2020 = Note receivable x Interest rate x Time period

= 44,400 x 6% x 2/12

= $444

Interest revenue on May 1, 2021 = Note receivable x Interest rate x Time period

= 44,400 x 6% x 4/12

= $888

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