Question

Oriole Supply Co. has the following transactions related to notes receivable during the last 2 months of 2020. The company does not make entries to accrue interest except at December 31. Nov. 1 Loaned $23,500 cash to Manny Lopez on a 12-month, 12% note. Dec, 11 Sold goods to Ralph Kremer, Inc., receiving a $61.200, 90-day, 10% note. Received a $97,200, 180 day, 8% note in exchange for Joe Fernetti's outstanding accounts receivable. 31 Accrued interest revenue on all notes receivable. 16

Answer 1

Debit. Credit

Nov 1 note receivable 23,500

Cash. 23,500

Dec 11. Note receivable 61,200

Revenue. 61,200

Dec 16 Note receivable. 97,200

Accounts receivable. 97,200

Dec 31 Notes receivable. 2,154

Accrued interest. 2,154

Accrued interest working:

Interest on note to Manny Lopez : 23,500 * 2 month / 12 month * 12% = $ 470

Interest on note to Ralph Kremer : 61,200* 20 days / 360 days * 10% = $ 1,360

Interest on DEC 16 note : 97,200 * 15 days / 360 days * 8% = $ 324

Total interest accrued = 470 + 1,360 + 324 = $ 2,154

Assuming interest rates are for full year