Question

On August 2, ABC Co. receives a $7,900, 90-day, 10.5% note from its customer who is past due on what he owes. This note is replaces the customer's $7,900 account receivable. Prepare ABC's journal entry assuming the note is honored by the customer on October 31 of that same year. (Do not round intermediate calculations. Round your answers to nearest whole dollar value. Use 360 days a year.)

Answer 1

Answer:

Oct 31

Dr Cash $8,107

Cr Notes receivable$7,900

Cr Interest revenue $207

Explanation:

Prepare ABC's journal entry assuming the note is honored by the customer on October 31 of that same year

Oct 31

Dr Cash $8,107

[$7,900+($7,900*10.5%*90/360)]

Cr Notes receivable$7,900

Cr Interest revenue $207

($7,900*10.5%*90/360)]