Question

Exercise 8-11 Sheridan Co. has the following transactions related to notes receivable during the last 2 months of the year. The company does not make entries to accrue interest except at December 31. Nov. 1 Loaned $63,000 cash to C. Bohr on a 12-month, 8% note. Dec. 11 Sold goods to K. R. Pine, Inc., receiving a $3,600, 90-day, 5% note. 16 Received a $12,000, 180-day, 7% note to settle an open account from A. Murdock. 31 Accrued interest revenue on all notes receivable. Journalize the transactions for Sheridan Co. (Omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Use 360 days for calculation.) Date Account Titles and Explanation Debit Credit

Answer 1

Date	Account titles and explanation	Debit	Credit
Nov 1	8% Notes Receivable	$63,000
	Cash		$63,000
Dec 11	5% Notes Receivable	$3,600
	Sales revenue		$3,600
Dec 16	Notes receivable	$12,000
	Accounts Receivable		$12,000
Dec 31	Interest receivable	$885
	Interest revenue		$885

Computation of accrued interest on December 31st

1) 63,000 * 8% *2/12 = $840

2) $3,600 * 5% * 20 days / 360 = $10

3) $12,000 * 7% * 15 / 360 = $35

Total accrued interest = $885