Question

Included in Swifty Company’s December 31 trial balance is a note receivable of $ 9,600. The note is a 4-month, 10% note dated October 1. Prepare Swifty’s December 31 adjusting entry to record $ 240 of accrued interest, and the February 1 journal entry to record receipt of $ 9,920 from the borrower. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Answer 1

The journal entries are given below:

• For recording the accrued interest:

On Dec. 31

Interest Receivable  $240

        To Interest Revenue  $240

 (To record the accrued interest)

• For recording the receipts from the borrower

On Feb 1

Cash  $9,920

      To Interest Receivables  $240

      To Interest Revenue  $80

       To Notes Receivables  $9,600

(To record the amount received from the borrower)

In this way, the journal entry should be prepared.

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