Question

On October 1, 2017, BLANK Equipment Company sold a pecan-harvesting machine to BLANK Brothers Farm, Inc. In lieu of a cash payment BLANK Brothers Farm gave ** a 2-year, $150,800, 10% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. BLANK Equipment's financial statements are prepared on a calendar-year basis.

Assuming BLANK Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for BLANK Equipment Company for the entire term of the note. Assume that reversing entries are not made on January 1, 2018 and January 1, 2019. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
	(To record the collection of interest)
	(To record the collection of the note)

Answer 1

Date	Account Title	Debit	Credit
Oct 1, 2017	Notes Receivable	$150,800
	Sales Revenue		$150,800
	(To record the sales revenue)
Dec 31, 2017	Interest Receivable	$3,770
	Interest Revenue [$150800 x 10%/12 x 3]		$3,770
	(To record accrual of interest revenue)
Oct 1, 2018	Cash	$15,080
	Interest Receivable		$3,770
	Interest Revenue [$150800 x 10%/12 x 9]		$11,310
	(To record the collection of interest)
Dec 31, 2018	Interest Receivable	$3,770
	Interest Revenue [$150800 x 10%/12 x 3]		$3,770
	(To record accrual of interest revenue)
Oct 1, 2019	Cash	$15,080
	Interest Receivable		$3,770
	Interest Revenue [$150800 x 10%/12 x 9]		$11,310
	(To record the collection of interest)
Oct 1, 2019	Cash	$150,800
	Notes Receivable		$150,800
	(To record collection of note)