Question

Skysong Company had the following select transactions.

Apr 1, 2020 Accepted Goodwin Company's 12-month, 16% note in settlement of a $53,000 account receivable. 

July 1, 2020 Loaned $55,000 cash to Thomas Slocombe on a 9-month, 14% note. 

Dec. 31, 2020 Accrued interest on all notes receivable. 

Apr. 1, 2021 Received principal plus interest on the Goodwin note. 

Apr. 1.2021 Thomas Slocombe dishonored its note; Skysong expects it will eventually collect. 

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

Answer 1

Apr. 1,2020	Notes Receivable	53000
	Accounts Receivable		53000
July. 1,2020	Notes Receivable	55000
	Cash		55000
Dec 31,2020	Interest Receivable	6360		=53000*16%*9/12
	Interest Revenue		6360
Dec 31,2020	Interest Receivable	3850		=55000*14%*6/12
	Interest Revenue		3850
Apr 1,2021	Cash	61480
	Interest Receivable		6360
	Interest Revenue		2120	=53000*16%*3/12
	Notes Receivable		53000
Apr 1,2021	Accounts Receivable	60775
	Interest Receivable		3850
	Interest Revenue		1925	=55000*14%*3/12
	Notes Receivable		55000