Question

The following transactions took place for Parker’s Grocery.

a.		Jan.		1		Loaned $41,000 to a cashier of the company and received back a one-year, 10 percent note.
b.		June		30		Accrued interest on the note.
c.		Dec.		31		Received interest on the note. (No interest has been recorded since June 30.)
d.		Dec.		31		Received principal on the note.

Required:

Prepare the journal entries that Parker's Grocery 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.)

Answer 1

Answer

Date	Accounts title	Debit	Credit
01-Jan	Notes receivables	$41,000
	Cash		$41,000
	(to record receipt of note)
30-Jun	Interest receivables ($41000 x 10% x 6/12)	$2,050
	Interest Revenue		$2,050
	(to record 6 months accrued interest)
31-Dec	Cash	$4,100
	Interest receivables		$2,050
	Interest revenue		$2,050
	(to record receipt of 12 month interest)
31-Dec	Cash	$41,000
	Notes receivables		$41,000
	(to record principal amount)