Question

C&Q Marketing (CQM) recently hired a new marketing director, Jeff Otos, for its main office. As part of the arrangement, CQM agreed on February 28, 2017, to advance Jeff $45,000 on a one-year, 8 percent note, with interest to be paid at maturity on February 28, 2018. CQM prepares financial statements on June 30 and December 31.

Required:
1. Prepare the journal entry that CSM will make when the note is established. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the journal entries that CSM will make to accrue interest on June 30 and December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.)

3. Prepare the journal entry that CSM will make to record the interest and principal payments on February 28, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.)

Answer 1

Date	General Journal	Debit($)	Credit($)
28/02/2017	Notes Receivable	45,000
	Cash		45,000
	(Receipt of note for a loan to Jeff)
30/06/2017	Interest Receivable ($45,000 x 8% x 4/12)	1,200
	Interest Revenue		1,200
	(Accrued Interest recorded as on 30th June 2017)
31/12/2017	Interest Receivable ($45,000 x 8% x 6/12)	1,800
	Interest Revenue		1,800
	(Accrued Interest recorded as on 31st December 2017)
28/02/2018	Cash	3,600
	Interest Receivable ($1,200 + $1,800)		3,000
	Interest Revenue ($45,000 x 8% x 2/12)		600
	(Payment for Interest recorded for the period)
28/02/2018	Cash	45,000
	Notes Receivable		45,000
	(Record for the maturity of note on the date)