Question

Exercise 9-14 Pharoah Company had the following select transactions. Apr. 1, 2020 Accepted Goodwin Company's 12-month, 10% note in settlement of a $30,400 account receivable. July 1, 2020 Loaned $32,400 cash to Thomas Slocombe on a 9-month, 8% note. Dec. 31, 2020 Accrued interest on all notes receivable. Apr. 1, 2021 Received principal plus interest on the Goodwin note. Apr. 1, 2021 Thomas Slocombe dishonored its note; Pharoah expects it will eventually collect. Prepare journal entries to record the transactions. Pharoah prepares adjusting entries once a year on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record interest at 10%) (To record interest at 8%) (To record principal plus interest on the Goodwin note) (To record note dishonoured)

Answer 1

Journal Entries in the books of Pharoah Company

Date	Account Titles and Explanations	Debit	Credit
Apr 1 2020	Notes Receivable A/c	$30,400
	Accounts Receivable A/c		$30,400
July 1 2020	Nots Receivable A/c	$32,400
	Cash A/c		$32,400
Dec 31 2020	Interest Receivable A/c	$2,280
	Interest Revenue A/c ($30,400 * 10% * (9/12)		$2,280
	[To record interest at 10%
Dec 31 2020	Interest Receivable A/c	$1,296
	Interest Revenue A/c ($32,400 * 8% * (6/12)		$1,296
	[To record interest at 8%]
Apr 1 2021	Cash A/c
	Notes Receivable A/c		$30,400
	Intesrest Revenue A/c (30,400 * 10% * (3/12))		$760
	Interest Receivable A/c (30,400 * 10% * (9/12))		$2,280
	[To record principal plus interest on the Goodwin Note]
Apr 1 2021	Accounts Receivable A/c	$34,344
	Notes Receivable A/c		$32,400
	Interest Revenue A/c ($32,400 * 8% * (3/12)		$648
	Interest Receivable A/c ($32,400 * 8% * (6/12)		$1,296
	[To record Note Dishonoured]