Question

On december 31, 2017, Houston Inc. Provided consulting services to Conroe companyat anagreed price of $356,630.79. Houston accepted $75000 down and agreed to accept the balance in six equal installments of $60,000 to be received annually on December 31st, beginning December, 2018. An assumed interest rate of 7.5% is imputed. using excel, prepare the amortization schedule and then record all required journal entries-that would be made by Houston and Conroe on the following dates a) December 31, 2017; b) December 31,2018; c) December 31 2019; D) December 31, 2020; E) December 31 2021; F) December 31, 2022; G) December 31 2023.

Please help on journal entries for Houston and Conroe since I have done the amortization table already. Thanks for your help

Answer 1

Solution :

Amortization schedule
Date	Cash received	Interest Income	Principal amount received	Balance in note receivables
31-Dec-17				$281,630.79
31-Dec-18	$60,000.00	$21,122.31	$38,877.69	$242,753.10
31-Dec-19	$60,000.00	$18,206.48	$41,793.52	$200,959.58
31-Dec-20	$60,000.00	$15,071.97	$44,928.03	$156,031.55
31-Dec-21	$60,000.00	$11,702.37	$48,297.63	$107,733.92
31-Dec-22	$60,000.00	$8,080.04	$51,919.96	$55,813.96
31-Dec-23	$60,000.00	$4,186.04	$55,813.96	$0.00

Journal Entries - Houston Inc.
Date	Particulars	Debit	Credit
31-Dec-17	Cash Dr	$75,000.00
	Notes receivables Dr	$281,630.79
	To Service Revenue		$356,630.79
	(To record consulting revenue)
31-Dec-18	Cash Dr	$60,000.00
	To Interest income		$21,122.31
	To Notes receivables		$38,877.69
	(To record interest income and installment received)
31-Dec-19	Cash Dr	$60,000.00
	To Interest income		$18,206.48
	To Notes receivables		$41,793.52
	(To record interest income and installment received)
31-Dec-20	Cash Dr	$60,000.00
	To Interest income		$15,071.97
	To Notes receivables		$44,928.03
	(To record interest income and installment received)
31-Dec-21	Cash Dr	$60,000.00
	To Interest income		$11,702.37
	To Notes receivables		$48,297.63
	(To record interest income and installment received)
31-Dec-22	Cash Dr	$60,000.00
	To Interest income		$8,080.04
	To Notes receivables		$51,919.96
	(To record interest income and installment received)
31-Dec-23	Cash Dr	$60,000.00
	To Interest income		$4,186.04
	To Notes receivables		$55,813.96
	(To record interest income and installment received)