Question

Q1- V Company had the following select transactions.

Apr. 1, 2017 Accepted G Company’s 12-month, 12% note in settlement of a $30,000 account receivable.

July 1, 2017 Loaned $25,000 cash to T on a 9-month, 10% note.

Apr. 1, 2018 Received principal plus interest on the G note.

Apr. 1, 2018 T dishonored its note; V expects it will eventually collect.

Instructions Prepare journal entries to record the transactions. V prepares adjusting entries once a year on December 31.

Answer 1

4/1/2017	Notes Receivable	30000
	Accounts Receivable		30000
7/1/2017	Notes Receivable	25000
	Cash		25000
12/31/2017	Interest Receivable	2700		=(30000*12%/12*9)
	Interest Revenue		2700
12/31/2017	Interest Receivable	1250		=(25000*10%/12*6)
	Interest Revenue		1250
4/1/2018	Cash	33600
	Notes Receivable		30000
	Interest Receivable		2700
	Interest Revenue		900	=(30000*12%/12*3)
	Accounts Receivable	26875
	Notes Receivable		25000
	Interest Receivable		1250
	Interest Revenue		625	=(25000*10%/12*3)