In: Accounting
On 1 September 2019, Mike Co. signed a 12% six-month note receivable in settlement of accounts receivable of €320,000. The note and interest are all due at maturity.
General Journal |
|||
Date |
Account Titles and Explanation |
Debit |
Credit |
(a) |
|||
|
|||
(b) |
|||
(c) |
|||
Journal | ||||
No | Date | Accounts Title and Explanation | Debit | Credit |
a | 01-09-19 | Accounts Receivable | 320,000 | |
Notes Receivable | 320,000 | |||
(being accounts receivable settled by signing a note) | ||||
b | 31-12-19 | Interest Receivable | 12,800 | |
Interest Revenue* | 12,800 | |||
(being accrual of Interst) | ||||
c | 01-03-20 | Cash | 339,200 | |
Note Receivable | 320,000 | |||
Interest Revenue* | 6,400 | |||
Interest Receivable | 12,800 | |||
(being receipt of note with interest) | ||||
d | 01-03-20 | Accounts Receivable/Allowence for Bad debt/Bad debt | 320,000 | |
Interest Revenue | 19,200 | |||
Interest Receivale | 19,200 | |||
Notes Receivable | 320,000 |
*Interest till 31-12-2019 = 320000x12%x4months/12months = 12,800
*Interest till 01-03-2020 = 320000x12%x2/12 = 6,400
in b part I assumed that the date in questin were wrong because in question date is 31-12-2018 and i assumed it is 31-12-2019
In d part it can be revise to accounts receivable if the amunt can be recoverable or it can be treated as bad debt