Question

Prepare the general entries to record the following transations on MNO's books. (1) 1/1/2017 MNO received a 30 day 10% interest bearing note for 1000 on an overdue account receivable from ABC Co. (2) 1/31/2017 MNO received proceeds from the note includiing interest from ABC company (3) prepare the journal entries to record the respective entries on ABC's books

Answer 1

In Books of MNO: Journal Entries Date Account Title and Explaination Debit Credit Post. Ref. 1/31/2017 Notes Receivable 1,000.00 Accounts Receivable $ 1,000.00 (To record Notes received in exchange of accounts receivable) 1,008.22 SA 3/2/2017 Cash Notes Receivable Interest Revenue ($1000x10%x30/365) (To record collection of maturity proceeds of note along with interest) 1,000.00 8.22

In Books of ABC: Journal Entries Date Account Title and Explaination Debit Credit Post. Ref. 1,000.00 1/31/2017 Accounts Payable Notes Payable (To record Notes payable in exchange of accounts payable) 1,000.00 SA 8.22 1,000.00 SA 3/2/2017 Interest Expense ($1000x10%x30/365) Notes Payable Cash (To record payment of maturity proceeds of note along with interest) 1.008.22