Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Journal Entries for Notes Receivable Transactions Two reasons for accepting a note from a customer are (1) as a promise of payment on a credit purchase, and (2) to grant a time extension on an amount owed on an open account. In both cases, the customer's note is recorded in a notes receivable account. Use the following transactions for Joy’s TV and Electronics to demonstrate journal entries for your class. 1. June 1: Sold a $2,000 big-screen TV to a customer. The customer was asked to sign a 120day, 12% note. (Hint: the interest is not recorded until it is earned.) June 1 Notes Receivable……………………. 2,000 Sales…………………….…. 2,000 1. Sept. 29: Received payment on the $2,000, 120-day, 12% note. Sept. 29 Cash………………………………… 2,080 Notes Receivable……………. 2,000 Interest Revenue…………….. 80 2. Oct. 1: Granted a 60-day time extension to S. Greene, who owed $1,000 on account. Ms. Green signed a 60-day, 15% note for the amount owed. Oct. 1 Notes Receivable…………………….. 1,000 Accounts Receivable-S. Greene 1,000 3. Nov. 30: Received payment on the $1,000, 60-day, 15% note from S. Greene. Nov. 30 Cash………………………………….. 1,025 Notes Receivable…………….. 1,000 Interest Revenue……………… 25 4. Dec. 1: Granted a 90-day time extension to J. Smith, who owed $800 on account. Mr. Smith signed a 90-day, 15% note for the amount owed. Nov. 1 Notes Receivable………………………. 800 Accounts Receivable—J. Smith 800 NOTE: Assume the accounting period ends on December 31. At that time, 30 days of interest have been earned on the note from J. Smith. The matching concept dictates that any interest earned but not received must be recorded through an adjusting entry. Therefore, an adjusting entry would be made to record 30 days of interest on the $800 note. 5. Dec. 31: Record interest earned on the note from J. Smith. Dec. 31 Interest Receivable……………………. Interest Revenue………………. 10 10 6. Mar 1: Received payment on the $800, 90-day, 15% note from J. Smith. Mar. 1 Cash ………………………………… 1,030 Notes Receivable……………. 1,000 Interest Receivable………….. Interest Revenue……………. 10 20