Question

The following transactions took place for Parker’s Grocery. a. Jan. 1 Loaned $47,000 to a cashier of the company and received back a one-year, 10 percent note. b. June 30 Accrued interest on the note. c. Dec. 31 Received interest on the note. (No interest has been recorded since June 30.) d. Dec. 31 Received principal on the note.

Answer 1

Answer:

The journal entries for the followings are shown below:

Explanation:

a.

On Jan 1

Loan A/c..........................Dr $47,000

      Cash A/c......................Cr  $47,000

Being the loan is cashed of the company

b.

On June 30

Interest receivable A/c............................Dr  $2,350

        Interest Revenue A/c..........................Cr  $2,350

Being interest accrued on the note

c.

On Dec 31

Cash A/c...........................Dr  $4,700

        Interest receivable A/c.......Cr   $2,350

        Interest revenue A/c.............Cr  $2,350

Being interest received on the note

d.

Cash A/c........................Dr  $47,000

       Loan A/c......................Cr  $47,000

Being received principal on the note

Working Note:

Interest = Amount × 10% × 6/ 12

Interest = $47,000 × 10% × 6/12

Interest = $2,350