Question

Elburn Supply Co. has the following transactions related to notes receivable during the last 2 months of 2017. The company does not make entries to accrue interest except at December 31.

Nov. 1		Loaned $23,500 cash to Manny Lopez on a 12-month, 12% note.
Dec. 11		Sold goods to Ralph Kremer, Inc., receiving a $61,200, 90-day, 10% note.
16		Received a $97,200, 180 day, 8% note in exchange for Joe Fernetti’s outstanding accounts receivable.
31		Accrued interest revenue on all notes receivable.

Answer 1

Journal entries					Calculation of accrued interest
Date	Account Titles	Debit	Credit		Type of Note Receivables	Amount	Interest Rate	Yearly Interest	Date of Issue	Date of interest accrual	No.of days for which interest accrued	Accrued Interest
Nov.1,2017	12% Note Receivables	$23,500.00			12%	$23,500.00	12%	$2,820.00	01/11/2017	31/12/2017	60	$463.56
	Cash		$23,500.00		10%	$61,200.00	10%	$6,120.00	11/12/2017	31/12/2017	20	$335.34
					8%	$97,200.00	8%	$7,776.00	16/12/2017	31/12/2017	15	$319.56
Dec.11,2017	10% Note Receivables	$61,200.00			Accrued Interest on Notes as on 31/12/2017							$1,118.47
	Sales		$61,200.00
Dec.16,2017	8% Note Receivables	$97,200.00
	Accounts Receivables (Joe Fernetti)		$97,200.00
Dec.31,2017	Accrued Interest	$1,118.00
	Interest Income		$1,118.00