Question

Moon Star Company obtained two notes receivable during the year of 2019. The details of the notes are as follows:

October 3, 2019          Sold goods for $24,000 on account to a customer (Sun Company) and received 8% note. The note was due on October 18, 2019.

December 5, 2019      Received 13% note for $15,000 to replace account receivable from a customer (Strong Company). The note was due on January 5, 2020.

1. Compute maturity value of the note receivable received on October 3 (Show supporting calculations.)
2. Journalize the collection of the note which was due on October 18, 2019.
3. Journalize the adjusting entry at December 31, 2019 to record accrued interest.
4. Compute total interest revenue earned on the note receivable received on December 5, 2019 (Show supporting calculations.)
5. Journalize the collection of the note which was due on January 5, 2020.

Answer 1

a.
	October 3, 2019
	Maturity value ($24,000 + $24,000 x 8% x 15/360)		$24,080
b.	Date	Account Titles and Explanation	Debit	Credit
	October 18, 2019	Cash	24,080
		Interest Revenue		80
		Notes Receivable - Sun Company		24,000
c.	December 31, 2019	Interest Receivable	135
		Interest Revenue		135
		($15,000 x 13% x 25/360)
d.
	December 5, 2019
	Total interest revenue ($15,000 x 13% x 30/360)		$163
e.	January 5, 2020	Cash	15,163
		Interest Receivable		135
		Interest Revenue		27
		Notes Receivable - Strong Company		15,000