Answer:
<u>November 1</u>
Loaned $18,600 cash to Manny Lopez on a 12-month, 10% note.
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Dr Notes receivable 18,600
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Cr Cash 18,600
<u>December 11</u>
Sold goods to Ralph Kremer, Inc., receiving a $47,250, 90-day, 8% note.
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Dr Notes receivable 47,250
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Cr Sales revenue 47,250
<u>December 16</u>
Received a $58,200, 180 day, 9% note in exchange for Joe Fernetti’s outstanding accounts receivable.
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Dr Notes receivable 58,200
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Cr Accounts receivable 58,200
<u>December 31</u>
Accrued interest revenue on all notes receivable.
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Dr Interest receivable 728.25
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Cr Interest revenue 728.25
How to calculate interest:
Lopez: $18,600 x 10% x 2/12 = $300
Kremer: $47,250 x 8% x 20/360 = $210 (using a 360-day year; 20 days)
Fernetti: $58,200 x 9% x 15/360 = $218.25 (using a 360-day year; 15 days)
Total $728.25