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9 November, 18:44

On May 1, 2021, a company lends $110,000 to one of its main suppliers and accepts a 12-month, 7% note. Record the acceptance of the note on May 1, 2021, the adjustment on December 31, 2021, and the cash collection on May 1, 2022. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

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  1. 9 November, 20:46
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    No Date General Journal Dr. Cr.

    1 May 01, 2021 Notes receivable 110,000

    Cash 110,000

    2 December 31,2021 Interest receivable 5,133

    Interest revenue 5,133

    3 May 01, 2022 Cash 117,700

    Notes receivable 110,000

    Interest receivable 5,133

    Interest revenue 2,567

    Explanation:

    1. Loan of $110,000 agaisnt a note receivable is recorded as Note receivable to cash.

    2.

    Interest of 9 months is accrued in 2021.

    Interest revenue: $110,000 * 7% * 8/12 = $5,133

    3.

    Interest of 3 months is accrued in 2022

    Interest revenue: $110,000 * 7% * 4/12 = $2,567
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