Question

The following transactions took place for Parker's Grocery a. Jan. 1 Loaned $46,000 to a cashier of the company and received back a one-year, 9 percent note b. June 30 Accrued interest on the note. c. Dec. 31 Received interest on the note. (No interest has been recorded since June 30.) d. Dec. 31 Received principal on the note Required Prepare the journal entries that Parker's Grocery 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 Record the receipt of a note on January 1 for a $46,000 loan to an employee. Note: Enter debits before credits. Date General Journal Debit Credit Jan 01 Record entry Clear entry View general journal

Answer 1

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)