Answer:
Explanation:
The journal entries are shown below:
a. Notes receivable A/c Dr $8,000
To Accounts receivable $8,000
(Being receipt of note is recorded)
b. Interest receivable A/c Dr $80
To Interest revenue A/c $80
(Being accrued interest is recorded)
The computation of accrued interest is shown below:
= Principal × rate of interest × number of months ÷ (total number of months in a year)
= $8,000 × 6% × (2 months ÷ 12 months)
= $80
The 2 months is calculated from November 30 to December 31
c. Cash A/c Dr $240
To Interest receivable $80
To Interest revenue $160
(Being cash received in respect of interest accrual is recorded)
The computation of accrued interest is shown below:
= Principal × rate of interest × number of months ÷ (total number of months in a year)
= $8,000 × 6% × (4 months ÷ 12 months)
= $160
The 4 months is calculated from November 30 to April 30
d. Cash A/c Dr $10,200
To Notes receivable A/c $10,200
(Being the receipt of the payment is recorded)
