Question

Shamrock Company had the following select transactions.

Apr.	1, 2022		Accepted Goodwin Company’s 12-month, 7% note in settlement of a $38,000 account receivable.
July	1, 2022		Loaned $22,000 cash to Thomas Slocombe on a 9-month, 12% note.
Dec.	31, 2022		Accrued interest on all notes receivable.
Apr.	1, 2023		Received principal plus interest on the Goodwin note.
Apr.	1, 2023		Thomas Slocombe dishonored its note; Shamrock expects it will eventually collect.

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

 

Answer 1

ANSWER)

DATE	ACCOUNT TITLES AND EXPLANATION	DEBIT	CREDIT	Explanation
1-Apr-22	Notes Receivable	38,000.00
	Accounts Receivable		38,000.00
1-Jul-22	Notes Receivable	22,000.00
	Cash		22,000.00
31-Dec-22	Interest Receivable	1,995.00		(38000*7%*9/12)
	Interest Revenue		1,995.00
	(To Record interest on goodwin Co Note @ 7% for 9 months (April to December))
31-Dec-22	Interest Receivable	1,320.00		(22000*12%*6/12)
	Interest Revenue		1,320.00
	(To Record interest on Thomas Slocombe @ 12% for 6 months (July to December))
1-Apr-23	Cash Account	40,660.00
	Notes Receivable		38,000.00
	Interest Receivable		1,995.00
	Interest Revenue		665.00	(Interest for 3 months [January to March] = 38000*7%*3/12)
1-Apr-23	Accounts Receivable	23,980.00
	Notes Receivable		22,000.00
	Interest Receivable		1,320.00
	Interest Revenue		660.00	(Interest for 3 months [January to March] = 22000*12%*3/12)