Singletary Company had the following select transactions. Apr. 1, 2010 Accepted
ID: 2385153 • Letter: S
Question
Singletary Company had the following select transactions. Apr. 1, 2010 Accepted Wilson Company's 1-year, 12% note in settlement of a $20,000 account receivable. July 1, 2010 Loaned $25,000 cash to Richard Dent on a 9-month, 10% note. Dec. 31, 2010 Accrued interest on all notes receivable. Apr. 1, 2011 Received principal plus interest on the Wilson note. Apr. 1, 2011 Richard Dent dishonored its note; Singletary expects it will eventually collect. Instructions Prepare journal entries to record the transactions. Singletary prepares adjusting entries once a year on December 31.Explanation / Answer
Apr. 1, 2010 Accepted Wilson Company's 1-year, 12% note in settlement of a $20,000 account receivable. 1 Apr 2010 Note Rxable Dr 20,000 Acct Rxable Cr 20,000 July 1, 2010 Loaned $25,000 cash to Richard Dent on a 9-month, 10% note. 1 Jul 2010 Note Rxable Dr 25000 Cash Cr 25,000 Dec. 31, 2010 Accrued interest on all notes receivable. 31 Dec 2010 Int Rxable Dr 3467 Int Revenue Cr 3467 (Note 12%*20000*9/12 + 10%*25000*6/9 = $3467) Apr. 1, 2011 Received principal plus interest on the Wilson note. 1 Apr 2011 Cash Dr 22,400 Note Rxable Cr 20000 Int Rxable Cr 2400 Apr. 1, 2011 Richard Dent dishonored its note; No entry reqd...Note will remain pedning till colelcted. At end of year when books are closed, it will e written off as bad debt