Question

The following transactions took place for Smart Solutions Inc 2017 a. July 1 Loaned $69,000 to an employee of the company and received back a one-year, 8 percent note. b. Dec. 31 Accrued interest on the note. 2018 Ouly 1 Received Interest on the note. (No interest has been recorded since December 31.) d. July 1 Received principal on the note. Required: Prepare the journal entries that Smart Solutions Inc. would record for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record the receipt of a note on July 1, 2017 for a $69.000 loan to an employee. Note: Enter debits before credits General Journal Date Jul 01, 2017 Debit Credit Record entry Clear entry View general journal

Answer 1

Date	General Journal	Debit	Credit
Jul 01, 2017	Note receivable	$69,000
	Cash		$69,000
	( To record issuance of note receivable)
Dec. 31, 2017	Interest receivable	$2,760
	Interest revenue		$2,760
	( To record interest revenue)
July 1, 2018	Cash	$5,520
	Interest receivable		$2,760
	Interest revenue		$2,760
	( To record interest received on note)
July 1 , 2018	Cash	$69,000
	Note receivable		$69,000
	( To record principal on the note)

Interest accrued on December 31, 2017 = Note x Interest rate x timer period

= 69,000 x 8% x 6/12

= $2,760

Interest revenue on July 1, 2018 = Note x Interest rate x timer period

= 69,000 x 8% x 6/12

= $2,760

Kindly comment if you need further assistance. Thanks‼!