1
Required:

a. The loan of $450,000 and acceptance of the note receivable on April 1, 2021.
b. The adjustment for accrued interest on December 31, 2021.
c. Cash collection of the note and interest on April 1, 2022.

Record the above transactions for Shoemaker Corporation.

1 Answer

2

Answer: Please find answer in explanation column

Explanation:

1.To record loan given

Date Account title and explanation      Debit                 Credit

Apr 1 2021    Notes receivable                   $450,000  

                        Cash                                                                     $450,000        

 

2.To record accrued interest

Date Account title and explanation        Debit                   Credit

Dec 31 2021 Interest receivable                     $40,500

         Interest revenue                                                                  $40,500

Calculation

Interest Revenue = Principal x rate x Time

= $450,000 x  12% x 9/12 ( April- December)

=$40,500

To record cash collection

Date Account title and explanation      Debit                      Credit

Apr 1,2022     Cash                                        $504,000

             Notes receivable                                                            $450,000

             Accrued Interest                                                               $54,000

           

Calculation:

Interest Revenue for January -March 31 =Principal x rate x Time/ Period   

=450,000 X 12% X 3/12  

=$13,500

Accrued Interest for (April- December of 2021) and (January -March 31 of 2022) =$40,500+$13,500=$54,000

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answered 10 months ago