Answer:
The journal entries are as follows:
(a) On January 1,
Note receivable A/c Dr. $46,000
To cash $46,000
(To record the note receivable)
(b) On June 30,
Interest receivable A/c Dr. $2,070
To Interest revenue $2,070
(To record the accrued interest on note)
Workings:
Time period: From 1st January to 30th June = 6 months
Interest revenue:
= $46,000 × 9% × (6/12)
= $2,070
(c) On December 31,
Cash A/c Dr. ($2,070 + $2,070) $4,140
To interest receivable $2,070
To interest revenue $2,070
(To record the interest received on note)
(d) On December 31,
Cash A/c Dr. $46,000
To Notes receivable $46,000
(To record the principal received on the note)
