Shamrock Company had the following select
transactions.
Apr. | 1, 2022 | Accepted Goodwin Company’s 12-month, 7% note in settlement of a $38,000 account receivable. | |
July | 1, 2022 | Loaned $22,000 cash to Thomas Slocombe on a 9-month, 12% note. | |
Dec. | 31, 2022 | Accrued interest on all notes receivable. | |
Apr. | 1, 2023 | Received principal plus interest on the Goodwin note. | |
Apr. | 1, 2023 | Thomas Slocombe dishonored its note; Shamrock expects it will eventually collect. |
Prepare journal entries to record the transactions. Shamrock
prepares adjusting entries once a year on December 31
ANSWER)
DATE | ACCOUNT TITLES AND EXPLANATION | DEBIT | CREDIT | Explanation |
1-Apr-22 | Notes Receivable | 38,000.00 | ||
Accounts Receivable | 38,000.00 | |||
1-Jul-22 | Notes Receivable | 22,000.00 | ||
Cash | 22,000.00 | |||
31-Dec-22 | Interest Receivable | 1,995.00 | (38000*7%*9/12) | |
Interest Revenue | 1,995.00 | |||
(To Record interest on goodwin Co Note @ 7% for 9 months (April to December)) | ||||
31-Dec-22 | Interest Receivable | 1,320.00 | (22000*12%*6/12) | |
Interest Revenue | 1,320.00 | |||
(To Record interest on Thomas Slocombe @ 12% for 6 months (July to December)) | ||||
1-Apr-23 | Cash Account | 40,660.00 | ||
Notes Receivable | 38,000.00 | |||
Interest Receivable | 1,995.00 | |||
Interest Revenue | 665.00 | (Interest for 3 months [January to March] = 38000*7%*3/12) | ||
1-Apr-23 | Accounts Receivable | 23,980.00 | ||
Notes Receivable | 22,000.00 | |||
Interest Receivable | 1,320.00 | |||
Interest Revenue | 660.00 | (Interest for 3 months [January to March] = 22000*12%*3/12) |
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