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On November 1, 2021, Bonita Farm Equipment sold a harvesting machine to Stead Industries. Instead of...

On November 1, 2021, Bonita Farm Equipment sold a harvesting machine to Stead Industries. Instead of a cash payment, Stead Industries gave Bonita Farm Equipment a $99,000, two-year, 6.0% note. The note required interest to be paid quarterly starting February 1, 2022. Bonita Farm Equipment’s financial statements are prepared on a calendar-year basis. The following instructions refer only to this note receivable.

Prepare journal entries for Bonita Farm Equipment for the full term of the note. Include the sale of the equipment on Nov. 1, 2021, receipt of interest, adjusting entries required on December 31, 2021 and 2022, and the collection of the note on November 1, 2023. Ignore Cost of Goods Sold. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date

Account Titles and Explanation

Debit

Credit

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

                                                                      Nov. 1, 2021Dec. 31, 2021Feb. 1, 2022May 1, 2022Aug. 1, 2022Nov. 1, 2022Dec. 31, 2022Feb. 1, 2023May 1, 2023Aug. 1, 2023Nov. 1, 2023

Solutions

Expert Solution

Date Account title and explanation Debit Credit
Nov. 1, 2021 Note receivable        99,000
        Sales        99,000
Dec. 31, 2021 Interest receivable              990
        Interest revenue (99,000 x 6% x 2/12)              990
Feb. 1, 2022 Cash           1,485
        Interest receivable              990
        Interest revenue (99,000 x 6% x 1/12)              495
May. 1, 2022 Cash           1,485
        Interest revenue (99,000 x 6% x 3/12)           1,485
Aug. 1, 2022 Cash           1,485
        Interest revenue (99,000 x 6% x 3/12)           1,485
Nov. 1, 2022 Cash           1,485
        Interest revenue (99,000 x 6% x 3/12)           1,485
Dec. 31, 2022 Interest receivable              990
        Interest revenue (99,000 x 6% x 2/12)              990
Feb. 1, 2023 Cash           1,485
        Interest receivable              990
        Interest revenue (99,000 x 6% x 1/12)              495
May. 1, 2023 Cash           1,485
        Interest revenue (99,000 x 6% x 3/12)           1,485
Aug. 1, 2023 Cash           1,485
        Interest revenue (99,000 x 6% x 3/12)           1,485
Nov. 1, 2023 Cash      100,485
       Note receivable        99,000
        Interest revenue           1,485

ekkarill92 answered 1 year ago
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