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 $110,000 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

1)
Date	General Journal	Debit	Credit
February 28, 2017	Note Receivable	110,000
	Cash		110,000
	(To record note receivable)
2)
Date	General Journal	Debit	Credit
June 30, 2017	Interest Receivable	2,933		(110000*8%/12*4)
	Interest Revenue		2,933	(110000*8%/12*4)
	(To record interest Revenue)
December 31, 2017	Interest Receivable	4,400		(110000*8%/12*6)
	Interest Revenue		4,400	(110000*8%/12*6)
	(To record interest Revenue)
3)
Date	General Journal	Debit	Credit
February 28, 2018	Cash	118,800
	Note Receivable		110,000
	Interest Receivable		7,333
	Interest Revenue		1,467
	(To record collection on note maturity)