Question

Vanderbilt Corporation, which utilizes a calendar year as its fiscal year, is the payee on a $12,000, 7%, 8-month note receivable from Stanford Company on October 1st, 2016. Journalize the entry to record the receipt of payment in full on June 1, 2017.

Answer 1

Given:
Payee: Vanderbilt Corporation
Notes Receivable from Stanford Company
$12,000, 7%, 8-month 
                               
                                         Debit             Credit

October 1, 2016
Notes Receivable            12,000 
           Cash                                           12,000
*to record notes receivable from Stanford Company

December 31, 2016
Interest Receivable               560
           Interest Income                                560

12,000 * 7% * 8/12 = 560
*to recognize interest earned but not yet received

June 1, 2017
Cash                                  12,560
          Notes Receivable                        12,000
          Interest Receivable                           560
*to recognize full payment on note.