Question

Teal Mountain Company had the following select transactions Accepted Goodwin Company's 12-month, 7% note in settlement of a $38,000 account receivable. Apr. 1, 2022 July 1, 2022 Loaned $23,000 cash to Thomas Slocombe on a 9-month, 12% note. Dec. 31, 2022 Accrued interest on all notes receivable Received principal plus interest on the Goodwin note. Apr. 1, 2023 Apr. 1, 2023 Thomas Slocombe dishonored its note; Teal Mountain expects it will eventually collect. Prepare journal entries to record the transactions. Teal Mountain prepares adjusting entries once a year on December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in order presented in the problem.) Account Titles and Explanation Debit Credit Date (To record interest accrued on Goodwin note) (To record interest accrued on Thomas note) (To record collection of Goodwin note and interest)

Answer 1

Journal entry

Date	account and explanation	Debit	Credit
Apr 1	Notes receivable-Goodwin Company	38000
	Account receivable		38000
Jul 1	Notes receivable-Thomas	23000
	Cash		23000
Dec 31	Interest receivable	1995
	Interest revenue (38000*7%*9/12)		1995
	(To record interest accrued on Goodwin note)
Dec 31	Interest receivable (23000*12%*6/12)	1380
	Interest revenue		1380
	(to record interest accrued on Thomas note)
Apr 1	Cash	40660
	Notes receivable-Goodwin Note		38000
	Interest receivable		1995
	Interest revenue		665
	(To record collection)
Apr 1	Account receivable	25070
	Notes receivable-Thomas		23000
	Interest receivable		1380
	Interest revenue (1380/2)		690
	(To record the dishonor of Thomas note)