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24 March, 02:13

Elizabeth Proctor sells equipment for $80 000 to Matthew Gamble on 1 July 2013 in exchange for note bearing 12 per cent interest. Prepare a journal entry to record the accrued interest on 30 June 2014, and the repayment on 30 September 2014.

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  1. 24 March, 05:46
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    Following would be the journal entries in the books of Elizabeth Procter,

    On July 1, 2013.

    Notes Receivable A/C Dr. $80,000

    To Equipment A/C $80,000

    (Being equipment sold against notes receivable being recorded)

    On June 30, 2014

    Notes Receivable A/C Dr. 9600

    To Interest Revenue A/C 9600

    (Being accrued interest on notes receivable recorded)

    On Sept 2014,

    Cash A/C Dr. 92,000

    To Notes Receivable A/C $80,000

    To Interest Receivable A/C $9600

    To Interest Revenue A/C $2400

    (Being notes receivable and interest received receipt being recorded)

    Interest Revenue refers to the income which has been earned as on a date.

    Interest Receivable refers to the income which has not been received and which has been outstanding.
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