On December 1, Daw Co. accepts a $16,000, 45-day, 9% note from a customer. (1) Prepare...

On December 1, Daw Co. accepts a $16,000, 45-day, 9% note from a customer. (1) Prepare the year-end adjusting entry to record accrued interest revenue on December 31. (2) Prepare the entry required on the note's maturity date assuming it is honored. (Use 360 days a year.)

Record the year-end adjustment related to this note, if any.

Record the journal entry on the note’s maturity date assuming it is honored. Assume Daw Company does not prepare reversing entries.

Expert Solution

The following two journal entries will be made:

1 - shows the year-end recording of interest receivable on the notes accepted (for the period belonging to that year)

2 - shows the entry on the maturity date - receiving the amount of the notes with interest in cash.

Journal Entries
Date	Particulars	Debit	Credit
Dec 31	Interest Receivable A/c	$ 120
	(16000 x 9% x 30/360)
	Interest Revenue A/c		$ 120

Jan 15	Cash	$ 16,180
	Interest Receivable A/c		$ 120
	Interest Revenue A/c		$ 60
	(16000 x 9% x 15/360) - - for balance 15 days
	Notes Receivable A/c		$ 16,000

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ekkarill92 answered 2 years ago

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