Question

Sheffield Corp. has the following transactions related to notes receivable during the last 2 months of 2020. The company does not make entries to accrue interest except at December 31.
Nov. 1 Loaned $62,400 cash to C. Bohr on a 12-month, 7% note.
Dec. 11 Sold goods to K. R. Pine, Inc., receiving a $1,800, 90-day, 7% note.
Dec. 16 Received a $9,600, 180-day, 8% note to settle an open account from A. Murdock.
Dec. 31 Accrued interest revenue on all notes receivable.

Required:
Journalize the transactions for Sheffield Corp.

Answer 1

Answer and Explanation:

The journal entries are shown below;

On Nov 1

Notes receivable-C.Bohr $62,400  

         To Cash $62,400

(Being cash paid is recorded)

On Dec 11

Notes receivable-K.R.Pine $1,800  

          To Sales revenue $1,800

(being sales revenue is recorded)

On Dec 16

Notes receivable-A.Murdock $9,600  

        To Account receivable $9,600

(Being note receivable is recorded)

On Dec 31

Interest receivable $767  

        To Interest revenue $767

(Being the interest revenue is recorded)

($62,400 × 7% × 2 ÷ 12 + $1,800 × 7% × 20 ÷ 360 + $9,600 × 8% × 15 ÷ 360)