Question

Richard Jackson and Melissa Aaron own and operate the Midwest Office Supply store. The following transactions involving notes and interest were completed during the last three months of 2019:

October

3.Received a $8,886, 7 1/2%, 30-day note from Hansen Appliance in payment for

sale of merchandise.

7.Received a $12,000, 9%, 45-day note from Jefferson Book Company in payment

of an account receivable

9.Received a $12,775, 10%, 60-day note from Josh Martinez in payment for sale

of merchandise

11. Issued a 40-day, S12,400, 8% note to Lincoln Paper Products in payment of an account payable

14. Issued a 30-day, $12,000, 7 A% note to Akron Paper in payment of a purchase of account of merchandise

20. Discounted the October 9 note receivable at First Federal Bank at 14%.

November

2.Received principal and interest from Hansen Appliance in full payment of

October 3 note receivable.

13. Paid principal and interest to Akron Paper in full payment of October 14 note payable

20. Paid $6,000, plus interest to Lincoln Paper Products (see October 11); and Issued a new, 6400, 11%, 30-day note payable

21. Received $4,000, plus interest from Jefferson Book Company (see October ) and received a new, 8,000, 30-day, 10% note receivable.

24. Received a $11,000, 7 1/4%, 30-day note receivable from Michelle Davis in payment for for sale of merchandise

30. Discounted the November 24 note at First Federal Bank at 14%

December

6.Issued a $20,000, 8%, 90-day note to Apple Valley Supply in payment for a purchase of merchandise.

10.Received a $13,330, 8%, 90-day note from Ellis Furniture in payment for a sale

of merchandise.

20. Paid principal and interest to Lincoln Paper Products (see November 20) in full

payment of note payable.

21.Received principal and interest from Jefferson Book Company (see

November 21) in full payment of note receivable.

24.Michelle Davis dishonored the November 24 note. The bank bills Midwest

Office Supply for the maturity value of the note plus a $56 bank fee.

31.Michelle Davis' dishonored note is collected. She pays Midwest Office Supply

the maturity value of the note, the $56 bank fee, and interest at 11% on the

maturity value plus the bank fee

31. Prepared the necessary adjusting entry for notes receivable outstanding

31. Prepared the necessary adjusting entry for notes payable outstanding

Answer 1

Recording of all entries to determine the Notes Receivable and Notes Payable adjustment entries on 31 Dec

Date	Particulars	Dr	Cr	Party
3-Oct	7.5% Note Receivable	8886		Hansen
3-Oct	Sales		8886	Hansen
7-Oct	9% Note Receivable	12000		Jefferson
7-Oct	Account Receivable		12000	Jefferson
9-Oct	10% Note Receivable	12775		Josh
9-Oct	Sales		12775	Josh
11-Oct	Accounts Payable	12400		Lincoln
11-Oct	8% Note Payable		12400	Lincoln
14-Oct	Purchases	12000		Akron
14-Oct	7% Note Payable		12000	Akron
20-Oct	Cash	12775		First Federal
20-Oct	14% Note Payable		12775	First Federal
2-Nov	Cash	8,941.54		Hansen
2-Nov	Interest Income		55.54	Hansen
2-Nov	7.5% Note Receivable		8886	Hansen
13-Nov	7% Note Payable	12000		Akron
13-Nov	Interest Paid	70		Akron
13-Nov	Cash		12070	Akron
20-Nov	8% Note Payable	12400		Lincoln
20-Nov	Interest	110.22		Lincoln
20-Nov	Cash		6,110.22	Lincoln
20-Nov	11% Note Payable		6400	Lincoln
21-Nov	10% Note Receivable	8000		Jefferson
21-Nov	Cash	4135		Jefferson
21-Nov	9% Note Receivable		12000	Jefferson
21-Nov	Interest Income		135	Jefferson
24-Nov	7.25% Note Receivable	11000		Michelle
24-Nov	Sales		11000	Michelle
30-Nov	Cash	11000		First Federal
30-Nov	14% Note Payable		11000	First Federal
6-Dec	Purchases	20000		Apple
6-Dec	8% Note Payable		20000	Apple
10-Dec	8% Note Receivable	13330		Ellis
10-Dec	Sales		13330	Ellis
20-Dec	11% Note Payable	6400		Lincoln
20-Dec	Interest	58.67		Lincoln
20-Dec	Cash		6,458.67	Lincoln
21-Dec	Cash	8066.666667		Jefferson
21-Dec	10% Note Receivable		8000	Jefferson
21-Dec	Interest Income		66.67	Jefferson
24-Dec	14% Note Payable	11000		First Federal
24-Dec	Interest Paid	106.9444444		First Federal
24-Dec	Bank Fee	56		First Federal
24-Dec	Cash		11162.94444	First Federal
31-Dec	Cash	11,161		Michelle
31-Dec	Interest Income		82	Michelle
31-Dec	Interest Income (Penal Interest @11%)		24	Michelle
31-Dec	Bank Fee		56	Michelle
31-Dec	7.25% Note Receivable		11,000	Michelle
	Adjusting Entries for Notes Receivable
31-Dec	Accounts Receivable	12987.91667		Josh
	10% Note Receivable		12775	Josh
	Interest Income		212.9166667	Josh
	(Entry to transfer Note Recivable issued to Josh Martinez as Accounts Receivable)
	Adjusting Entries for Notes Payable
31-Dec	14% Note Payable	12775		Federal
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