2013
Dec. 16. Received from Lake Shore Clothing & Bags Co., on account, a $21,000, 90-day, 8% note dated December 16.
31. Recorded an adjusting entry for accrued interest on the note of December 16.
31. Recorded the closing entry for interest revenue.
2014
Mar. 16. Received payment of note and interest from Lake Shore Clothing & Bags Co. Journalize the entries to record the transactions.
Answer:
2013
Dec. 16 Notes Receivable 21,000
Accounts Receivable—Lake Shore
Clothing & Bags Co. 21,000
31 Interest Receivable 70
Interest Revenue 70
Accrued interest
($21,000 × 0.08 × 15/360 = $70).
31 Interest Revenue 70
Income Summary 70
2014
Mar. 16 Cash 21,420
Notes Receivable 21,000
Interest Receivable 70
Interest Revenue 350
($21,000 × 0.08 × 75/360).