Chapter 7 HW E7-39B accounting for notes receivable. Professional Enterprises sells on account. When a customer...

Chapter 7 HW E7-39B accounting for notes receivable.

Professional Enterprises sells on account. When a customer account becomes four months old, Professional converts the account to a note receivable. During 2010, Professional completed these transactions:

March 29 Sold goods on account to Montclair, Inc., $21,000

August 1 received a $21,000, 60 day, 5% note from Montclair, Inc., in satisfaction of its past due account receivable.

Sep. 30 collected the Montclair, Inc., note at maturity.

Requirement

Record the transactions in Professional Enterprises’ journal.

Expert Solution

Journal entries

Date	General journal	Debit	Credit

29-Mar	Accounts Receivables	$ 21,000.00
	Sales Revenue		$ 21,000.00
	(Goods sold)

1-Aug	Notes receivable	$ 21,000.00
	Accounts receivables		$ 21,000.00
	(Note received against accounts receivables)

30-Aug	Interest receivable	$ 87.50
	Interest Income		$ 87.50
	(Interest for 1 month Receivable on Note Receivable)

30-Sep	Cash	$ 21,175.00
	Notes Receivable		$ 21,000.00
	Interest Receivable		$ 87.50
	Interest Income		$ 87.50
	(Interest earned for 2 month received along with note value)

ekkarill92 answered 2 years ago

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