Relaxing Recliner Chairs completed the following selected transactions: 2011 Dec
ID: 2349364 • Letter: R
Question
Relaxing Recliner Chairs completed the following selected transactions: 2011 Dec 6 Received a $7,000, 90-day, 12% note on account from Dark Star Music. 31 Made an adjusting entry to accrue interest on the Dark Star Music note. 31 Made a closing entry for interest revenue. 2012 Mar 4 Collected the maturity value of the Dark Star Music note. Jun 30 Loaned $11,000 cash to Love Joy Music, receiving a six-month, 11% note. Oct 2 Received a $2,400, 60-day, 11% note for a sale to Voice Publishing. Ignore cost of goods sold. Dec 1 Voice Publishing dishonored its note at maturity; wrote off the note as uncollectible, debiting Allowance for uncollectible accounts. 30 Collected the maturity value of the Love Joy Music note. Requirements 1. Journalize all transactions for Jo Jo Music. Round all amounts to the nearest dollar. (For notes stated in days, use a 360-day year.) Relaxing Recliner Chairs completed the following selected transactions: 2011 Dec 6 Received a $7,000, 90-day, 12% note on account from Dark Star Music. 31 Made an adjusting entry to accrue interest on the Dark Star Music note. 31 Made a closing entry for interest revenue. 2012 Mar 4 Collected the maturity value of the Dark Star Music note. Jun 30 Loaned $11,000 cash to Love Joy Music, receiving a six-month, 11% note. Oct 2 Received a $2,400, 60-day, 11% note for a sale to Voice Publishing. Ignore cost of goods sold. Dec 1 Voice Publishing dishonored its note at maturity; wrote off the note as uncollectible, debiting Allowance for uncollectible accounts. 30 Collected the maturity value of the Love Joy Music note. Requirements 1. Journalize all transactions for Jo Jo Music. Round all amounts to the nearest dollar. (For notes stated in days, use a 360-day year.)Explanation / Answer
12/6/11 Note Receivable (Dr.) 7,000 Accounts Receivable (Cr.) 7,000 12/31/11 Interest Receivable (Dr.) 58.33 (7000*.12*25 days/360) Interest Revenue (Cr.) 58.33 12/31/11 Interest Revenue (Dr.) 58.33 Income Summary (Cr.) 58.33 3/4/12 Cash (Dr.) 7210 Interest Receivable (Cr.) 58.33 Interest Revenue (Cr.) 151.67 [(7000*.12*90/360)-58.33] Notes Receivable (Cr.) 7000 6/30/12 Note Receivable (Dr.) 11000 Cash (Cr.) 11000 10/2/12 Notes Receivable (Dr.) 2400 Sales (Cr.) 2400 12/1/12 Allowance for Uncollectible Accounts (Dr.) 2400 Notes Receivable (Cr.) 2400 12/30/12 Cash (Dr.) 11605 Notes Receivable (Cr.) 11000 Interest Revenue (Cr.) 605 (11000*.11*6/12)