Question

Instructions Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment 6 months after issuance. Consider the following transactions, which describe Marydale's experience with two such notes: a. On October 31, 2019, Marydale accepts a 6-month, 10% note from Customer A in lieu of a $4,200 cash payment for services provided that day. b. On February 28, 2020, Marydale accepts a 6-month, $1,800, 7% note from Customer B in lieu of a $1,800 cash payment for services provided on that day. c. On April 30, 2020, Customer A pays the entire note plus interest in cash. d. On August 31, 2020, Customer B pays the entire note plus interest in cash. Required: Prepare the necessary journal and adjusting entries required to record Transactions a through d in Marydale's records.

Answer 1

Answer
Date	Account and explanation	Debit	Credit
Oct-31	Notes receivable	$     4,200
	Service revenue		$     4,200
	(To record note accept)
Feb-28	Notes receivable	$     1,800
	Service revenue		$     1,800
	(To record note accept)
Apr-30	Cash	$     4,410
	Notes receivable		$     4,200
	Interest revenue (4200*10%*6/12)		$        210
	(To record collection)
Aug-31	Cash	$     1,863
	Notes receivable		$     1,800
	Interest revenue (1800*7%*6/12)		$          63
	(To record collection)