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Question 13 of 14

Moses Supply Co. has the following transactions related to notes receivable during the last quarter. Do not make entries to accrue interest except at December 31.

- Nov. 1: Loaned [tex]$\$[/tex]60,000[tex]$ cash to C. Bohr on a 12-month, $[/tex]7\%[tex]$ note.
- \ \textless \ strong\ \textgreater \ Dec. 11:\ \textless \ /strong\ \textgreater \ Sold goods to K. R. Pine, Inc., receiving a $[/tex]\[tex]$3,600$[/tex], 90-day, [tex]$8\%$[/tex] note.
- Dec. 16: Received a [tex]$\$[/tex]12,000[tex]$, 180-day, $[/tex]9\%[tex]$ note to settle an open account from A. Mur.
- \ \textless \ strong\ \textgreater \ Dec. 31:\ \textless \ /strong\ \textgreater \ Accrued interest revenue on all notes receivable.

\ \textless \ strong\ \textgreater \ Journalize the transactions for Moses Supply Co. (Omit cost of goods sold entries.)\ \textless \ /strong\ \textgreater \

\ \textless \ em\ \textgreater \ (Credit account titles are automatically indented when the amount is entered. Do not manually indent. Record journal entries in the order presented in the problem.)\ \textless \ /em\ \textgreater \

| \ \textless \ strong\ \textgreater \ Date\ \textless \ /strong\ \textgreater \ | \ \textless \ strong\ \textgreater \ Account Titles and Explanation\ \textless \ /strong\ \textgreater \ | \ \textless \ strong\ \textgreater \ Debit\ \textless \ /strong\ \textgreater \ | \ \textless \ strong\ \textgreater \ Credit\ \textless \ /strong\ \textgreater \ |
|----------|------------------------------------|-----------|------------|
| Nov. 1 | Notes Receivable | $[/tex]\[tex]$60,000$[/tex] | |
| | Cash | | [tex]$\$[/tex]60,000[tex]$ |
| Dec. 11 | Notes Receivable | $[/tex]\[tex]$3,600$[/tex] | |
| | Sales | | [tex]$\$[/tex]3,600[tex]$ |
| Dec. 16 | Notes Receivable | $[/tex]\[tex]$12,000$[/tex] | |
| | Accounts Receivable | | [tex]$\$[/tex]12,000$ |
| Dec. 31 | Interest Receivable | [Calculate amount] | |
| | Interest Revenue | | [Calculate amount] |



Answer :

GinnyAnswer
To record the transactions related to notes receivable for Moses Supply Co., we'll journalize the entries in the given order.

Nov. 1: Loaned \[tex]$60,000 Cash to C. Bohr on a 12-month, 7% note We need to record the loan given to C. Bohr as a note receivable. | Date | Account Titles and Explanation | Debit (\$[/tex]) | Credit (\[tex]$) | |----------|-----------------------------------|------------|-------------| | Nov. 1 | Notes Receivable | 60,000 | | | | Cash | | 60,000 | Dec. 11: Sold goods to K. R. Pine, Inc., receiving a \$[/tex]3,600, 90-day, 8% note
Recognize the sale of goods resulting in a note receivable.

| Date | Account Titles and Explanation | Debit (\[tex]$) | Credit (\$[/tex]) |
|----------|-----------------------------------|------------|-------------|
| Dec. 11 | Notes Receivable | 3,600 | |
| | Sales Revenue | | 3,600 |

Dec. 16: Received a \[tex]$12,000, 180-day, 9% note to settle an open account from A. Mur Settle the outstanding accounts receivable by converting it into a note receivable. | Date | Account Titles and Explanation | Debit (\$[/tex]) | Credit (\[tex]$) | |----------|-----------------------------------|------------|-------------| | Dec. 16 | Notes Receivable | 12,000 | | | | Accounts Receivable | | 12,000 | Dec. 31: Accrued interest revenue on all notes receivable Now calculate and record the accrued interest revenue on all notes receivable as of December 31. 1. For the \$[/tex]60,000 note from Nov. 1
Accrued interest calculation:
[tex]\[ \text{Interest} = \$60,000 \times 7\% \times \left(\frac{60}{365}\right) \approx \$690.41 \][/tex]

2. For the \[tex]$3,600 note from Dec. 11 Accrued interest calculation: \[ \text{Interest} = \$[/tex]3,600 \times 8\% \times \left(\frac{20}{365}\right) \approx \[tex]$15.78 \] 3. For the \$[/tex]12,000 note from Dec. 16
Accrued interest calculation:
[tex]\[ \text{Interest} = \$12,000 \times 9\% \times \left(\frac{15}{365}\right) \approx \$44.38 \][/tex]

Accumulated interest for all notes as of Dec 31:
[tex]\[ \$690.41 + \$15.78 + \$44.38 \approx \$750.57 \][/tex]

Record the accrued interest on all notes receivable:

| Date | Account Titles and Explanation | Debit (\[tex]$) | Credit (\$[/tex]) |
|----------|-----------------------------------|------------|-------------|
| Dec. 31 | Interest Receivable | 750.57 | |
| | Interest Revenue | | 750.57 |

So, the journal entries will be:

| Date | Account Titles and Explanation | Debit ([tex]$) | Credit ($[/tex]) |
|-----------|----------------------------------|------------|---------------|
| Nov. 1 | Notes Receivable | 60,000 | |
| | Cash | | 60,000 |
| Dec. 11 | Notes Receivable | 3,600 | |
| | Sales Revenue | | 3,600 |
| Dec. 16 | Notes Receivable | 12,000 | |
| | Accounts Receivable | | 12,000 |
| Dec. 31 | Interest Receivable | 750.57 | |
| | Interest Revenue | | 750.57 |

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