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28 October, 01:32

Brief Exercise 7-07 Grouper Family Importers sold goods to Tung Decorators for $33,600 on November 1, 2020, accepting Tung's $33,600, 6-month, 5% note. Prepare Grouper's November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest

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  1. 28 October, 03:11
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    Answer with its Explanation:

    The accounting treatment are as under:

    The note was issued because the customer required 6 months time to pay along with its interest.

    The initial entry would be:

    Dr Notes Receivable 33600

    Cr Sales Revenue 33,600

    When the interest would be due at the end of the note period the interest which is 5% for a year and 2.5% for 6 months.

    Dr Interest Receivable 840

    Cr Interest Revenue 840

    When the cash will be paid the entry would be:

    Dr Cash 34,440

    Cr Notes Receivable 33,600

    Cr Interest Receivable 840
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Home » Business » Brief Exercise 7-07 Grouper Family Importers sold goods to Tung Decorators for $33,600 on November 1, 2020, accepting Tung's $33,600, 6-month, 5% note.
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