Included in Gonzalez Company’s December 31 trial balance is a note receivable of $12,000. The note is a 4-month, 10% note dated October 1. Prepare Gonzalez’s December 31 adjusting entry to record $300 of accrued interest, and the February 1 journal entry to record receipt of $12,400 from the borrower.
The total amount of cash received is $12,400.
Journal entries are the first step in the accounting cycle. Journal entry is used to record all the business transactions and events. In recording the journal entry, the debit and credit should be equal.
Gonzalez’s December 31 adjusting entry and February 1 journal entry are as follows:
Accounts Titles and Explanations
Interest Revenue = $ 300 (Given)
Notes Receivable = $ 12,000 (Given)
Interest Receivable = $ 300 (Given)
Interest revenue = [ $12,000 × 10% × 1/12] = $100
Cash = $12,400 (Given)
BE3-9 (L03) Prepare the following adjusting entries at August 31 for Walgreens. (a) Interest on notes payable of $300 is accrued. (b) Services performed but unbilled total $1,400. (c) Salaries and wages earned by employees of $700 have not been recorded. (d) Bad debt expense for year is $900. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, Salaries and Wages Payable, Allowance for Doubtful Accounts, and Bad Debt Expense.
E3-13 (Lo5,6) (Closing Entries) The adjusted trial balance of Lopez Company shows the following data pertaining to sales at the end of its fiscal year, October 31, 2017: Sales Revenue $800,000, Delivery Expenses $12,000, Sales Returns and Allowances $24,000 and Sales Discounts $15,000.
(b) Prepare separate closing entries for (1) Sales and (2) the contra accounts to sales.
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