Question

Exercise 9-12

Vandiver Company had the following select transactions.

Apr.	1,	2017		Accepted Goodwin Company’s 12-month, 10% note in settlement of a $79,600 account receivable.
July	1,	2017		Loaned $81,600 cash to Thomas Slocombe on a 9-month, 8% note.
Dec.	31,	2017		Accrued interest on all notes receivable.
Apr.	1,	2018		Received principal plus interest on the Goodwin note.
Apr.	1,	2018		Thomas Slocombe dishonored its note; Vandiver expects it will eventually collect.

Prepare journal entries to record the transactions. Vandiver prepares adjusting entries once a year on December 31.

Answer 1

Date	Title	Debit	Credit
Apr 1, 2017	Note receivable	$ 79,600
	Accounts receivable		$ 79,600
	(To record receipt of note in exchange of accounts receivable)
July 1, 2017	Note receivable	$ 81,600
	Cash		$ 81,600
	(To record lending of money to Thomas Slocombo)
Dec 31, 2017	Interest receivable (($79,600*10%*9/12)+($81,600*8%*6/12))	$    9,234
	Interest revenue		$    9,234
	(To record interest accrued for the year)
Apr 1, 2018	Cash	$ 87,560
	Note receivable		$ 79,600
	Interest revenue ($79,600*10%*3/12)		$    1,990
	Interest receivable		$    5,970
	(To record receipt of note with interest)
Apr 1, 2018	Accounts receivable	$ 86,496
	Note receivable		$ 81,600
	Interest revenue ($81,600*8%*3/12)		$    1,632
	Interest receivable		$    3,264

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