Question

Notes Receivable Entries

The following data relate to notes receivable and interest for Owens Co., a financial services company. (All notes are dated as of the day they are received.) Assume 360 days in a year.

Mar. 8. Received a $90,000, 6%, 60-day note on account.
31. Received a $9,600, 7%, 90-day note on account.
May 7. Received $90,900 on note of March 8.
16. Received a $67,200, 8%, 90-day note on account.
June 11. Received a $42,000, 9%, 30-day note on account.
29. Received $9,768 on note of March 31.
July 26. Received $42,315 on note of June 11.
Aug. 4. Received a $3,600, 10%, 30-day note on account.
14. Received $68,544 on note of May 16.
Dec. 2. Received $3,630 on note of August 4.

Required:

Journalize the entries to record the transactions. For a compound transactions, if an amount box does not require an entry, leave it blank.

Mar. 8

Accounts Payable
Accounts Receivable
Cash
Interest Receivable
Notes Payable
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Receivable
Notes Payable
Notes Receivable

Mar. 31

Accounts Payable
Accounts Receivable
Cash
Interest Receivable
Notes Payable
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Receivable
Notes Payable
Notes Receivable

May 7

Accounts Payable
Accounts Receivable
Cash
Interest Receivable
Interest Revenue
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Payable
Interest Receivable
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Payable
Interest Receivable
Interest Revenue

May 16

Accounts Receivable
Bad Debt Expense
Cash
Interest Revenue
Notes Payable
Notes Receivable

Accounts Payable
Accounts Receivable
Bad Debt Expense
Cash
Interest Revenue
Notes Receivable

June 11

Accounts Receivable
Bad Debt Expense
Cash
Interest Revenue
Notes Payable
Notes Receivable

Accounts Receivable
Bad Debt Expense
Cash
Interest Revenue
Notes Payable
Notes Receivable

June 29

Accounts Payable
Accounts Receivable
Cash
Interest Expense
Interest Revenue
Notes Receivable

Accounts Receivable
Cash
Interest Receivable
Notes Payable
Notes Receivable
Unearned Interest

Accounts Receivable
Allowance for Doubtful Accounts
Cash
Interest Expense
Interest Receivable
Interest Revenue

July 26

Accounts Receivable
Bad Debt Expense
Cash
Interest Receivable
Interest Revenue
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Receivable
Notes Payable
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Receivable
Interest Revenue
Unearned Interest

Aug. 4

Accounts Receivable
Bad Debt Expense
Cash
Notes Payable
Notes Receivable
Sales

Accounts Payable
Accounts Receivable
Cash
Interest Revenue
Notes Receivable
Sales

Aug. 14

Accounts Payable
Accounts Receivable
Cash
Interest Payable
Interest Receivable
Notes Receivable

Accounts Receivable
Allowance for Doubtful Accounts
Cash
Interest Receivable
Notes Payable
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Payable
Interest Receivable
Interest Revenue

Dec. 2

Accounts Payable
Accounts Receivable
Bad Debt Expense
Cash
Interest Revenue
Notes Receivable

Accounts Receivable
Allowance for Doubtful Accounts
Cash
Interest Receivable
Notes Payable
Notes Receivable

Accounts Payable
Accounts Receivable
Cash
Interest Payable
Interest Receivable
Interest Revenue

Answer 1

• All working forms part of the answer
• Year End is assumed to be 31 Dec, and adjusting entries if required will be passed on Dec 31.
• Working for All Notes receivables data

Date	Note receivable amount	Interest rate	Annual Interest	Days	Interest expense [Annual Interest x Days/360]	Notes + Interest	Cash Received	Cash Received on
Mar-08	90000	6%	5400	60	900	90900	90900	May-07
Mar-31	9600	7%	672	90	168	9768	9768	Jun-29
May-16	67200	8%	5376	90	1344	68544	68544	Aug-14
Jun-11	42000	9%	3780	30	315	42315	42315	Jul-26
Aug-04	3600	10%	360	30	30	3630	3630	Dec-02

• Journal Entries based on above data

Date	General Journal	Debit	Credit
Mar-08	Notes receivables	$          90,000.00
	Accounts receivables		$               90,000.00
Mar-31	Notes receivables	$            9,600.00
	Accounts receivables		$                 9,600.00
May-07	Cash	$          90,900.00
	Interest Revenue		$                     900.00
	Notes receivables		$               90,000.00
May-16	Notes receivables	$          67,200.00
	Accounts receivables		$               67,200.00
Jun-11	Notes receivables	$          42,000.00
	Accounts receivables		$               42,000.00
Jun-29	Cash	$            9,768.00
	Interest Revenue		$                     168.00
	Notes receivables		$                 9,600.00
Jul-26	Cash	$          42,315.00
	Interest Revenue		$                     315.00
	Accounts receivables		$               42,000.00
Aug-04	Notes receivables	$            3,600.00
	Accounts receivables		$                 3,600.00
Aug-14	Cash	$          68,544.00
	Interest Revenue		$                 1,344.00
	Interest Revenue		$               67,200.00
Dec-02	Cash	$            3,630.00
	Interest Revenue		$                       30.00
	Accounts receivables		$                 3,600.00