Question

1. Account for notes receivable and accrued interest revenue

2. P4-47B Lilley & Taylor, partners in an accounting practice, completed the following selected transactions:

   2016
   Oct.	31	Performed service for Berger Manufacturing Inc., receiving a $30,000, three-month, 5% note.
   Dec.	31	Made an adjusting entry to accrue interest on the Berger note.
   2017
   Jan.	31	Collected the Berger note.
   Feb.	18	Received a 90-day, 8%, $10,000 note from Emerson Ltd., on account.
   	19	Sold the Emerson note to a financial institution, receiving cash of $9,700.
   Nov.	11	Loaned $20,000 cash to Diaz Insurance Agency, receiving a 90-day, 9% note.
   Dec.	31	Accrued the interest on the Diaz note.

3. Record the transactions in Lilley & Taylor’s journal. Round all amounts to the nearest dollar. Explanations are not required.

4. Show what Lilley & Taylor will report on its comparative classified balance sheet at December 31, 2017, and December 31, 2016.

5. Requirements

Answer 1

Journal Entries in the books of Lilley & Taylors for the year ended Dec 2016
Date	Particulars	Debit	Credit
31-Oct	Berger Manufacturing Inc A/C Dr	$30,000.00
	To Sales		$30,000.00
	(Being Sale entry recorded)
	5% Note                                     Dr	$30,000.00
	To Berger Manufacturing Inc A/C		$30,000.00
	(Being Tranfer entry made for notes received)
31-Dec	Accrued Interest Income                    Dr	$250.00
	To Interest Income		$250.00
	(Being interest @ 5% for 2 months calculated)
Journal Entries in the books of Lilley & Taylors for the year ended Dec 2017
Date	Particulars	Debit	Credit
31-Jan	Bank A/C Dr	$ 30,375.00
	To 5% Note		$ 30,000.00
	To Accrued Interest		$      250.00
	To Interest Income		$      125.00
	(Being Amount received along with interest for 3 Months)
18-Feb	8% 90-Day Note A/C                             Dr	$ 10,000.00
	To Emerson Ltd		$ 10,000.00
	(Being Notes received from Emerson on Account)
19-Feb	Bank A/C	$   9,700.00
	Discounting Charges A/C	$      300.00
	To 8% 90-Day Note A/C		$ 10,000.00
	(Being Notes discounted)
11-Nov	Diaz Insurance Agency A/c Dr	$ 20,000.00
	To Bank		$ 20,000.00
	(Being Loan granted to Diaz Insurance Agency)
31-Dec	Accrued Interest Income                    Dr	$      255.00
	To Interest Income		$      255.00
	(Being interest @ 9% for 51 days calculated)

Balance sheet of M/Z Lilley & Taylors
Liabilities		As on 31 dec 2016	As on 31 dec 2017	Assets		As on 31 dec 2016	As on 31 dec 2017
				5% Notes		$30,000.00
				Interest Accrued		$250.00	$255.00
				Bank (Net balance)			$20,075.00
				Total		$30,250.00	$20,330.00