Question

Vandiver Company had the following select transactions. Apr. 1, 2017 Accepted Goodwin Company’s 12-month, 14% note in settlement of a $84,400 account receivable. July 1, 2017 Loaned $86,400 cash to Thomas Slocombe on a 9-month, 12% 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record interest at 14%.) (To record interest at 12%.) (To record principal plus interest on the Goodwin note.) (To record note dishonoured.)

Answer 1

Date	Particular	Dr. $	Cr. $
2017
1-Apr	14% Note Receivable	84,400
	Accounts Receivable		84,400
	(Being note received from Goodwin co.)
1-Jul	12% Note receivable	86,400
	Cash		86,400
	(Being amount loaned and note received)
31-Dec	Interest Receivable	14,046
	Interest Revenue		14,046
	(Being interest on April 1 note $8,862 (84,400 * 14% * 9/12 Months) and interest on July 1 Note 5,184 (86,400 * 12% * 6/12 Months)
2018
1-Apr	Cash	96,216
	Interest Receivable		8,862
	Interest Revenue		2,954
	14% Note Receivable		84,400
	(Being note amount received along with 3 months interest i.e. $84,400 * 14% * 3/12 months)
1-Apr	Accounts Receivable (Thomas Slocombe)	94,176
	12% Note receivable		86,400
	Interest Receivable		5,184
	Interest Revenue		2,592
	(Being note dishonoured and amount due from Thomas Slocombe along with 3 months interest i.e. $86,400 * 12% * 3/12 months)

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