Question

On October 1, 2017, Xerox Equipment Inc. sold specialized office equipment to Bellamy Co. and received a 2-year, $120,000 8% note in lieu of cash. Interest is received annually on the note on October 1 and Xerox financial year ends December 31. Round to nearest whole number. Fill in the necessary information identified by the numbering to complete the journal entries at the given dates.

a.     October 1, 2017 Dr. Cr.

I	III
II		III

           

            I  Answer

            II  Answer

            III  Answer

b.     December 31, 2017 Dr. Cr.

I	III
II		III

           

            I  Answer

            II  Answer

            III  Answer

c.     October 1, 2018 Dr. Cr.

I	III
II		IV
Interest Revenue		V

           

            I  Answer

            II  Answer

            III  Answer

            IV  Answer

            V  Answer

Answer 1

Credit a. October 1, 2017 Date Account title Oct. 1, 2017 Note receivable Office equipment Debit 120,000 120,000 b. December 31, 2017 Credit Date 1 Account title Dec 31, 2017 Interest receivable Interest revenue (120,000x8%x3/12) Debit 2,400 2,400 | Credit c. October 1, 2018 Date Account title Oct. 1, 2018 Cash (120,000x8%) Interest revenue (120,000x8%x9/12) Interest receivable Debit 9,600 7,200 2,400