Problem 7-7 On October 1, 2017, Oriole Equipment Company sold a pecan-harvesting
ID: 2395587 • Letter: P
Question
Problem 7-7 On October 1, 2017, Oriole Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $193,200, 10% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1, Oriole's financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for Oriole Equipment Company for the entire term of the note. Assume that reversing entries are not made on January 1, 2018 and January 1, 2019. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Dr Cr Oct 01 '2017 Note Receivable Dr 193,200.00 To Sales 193,200.00 Dec 31'2017 Interest receivable DR 4,830.00 To Interest revenue 4,830.00 (193,200*10%*3/12) Oct 01'2018 Cash DR 19,320.00 To Interest receivable 4,830.00 To Interest revenues = 193200 * 10%*9/12 14,490.00 Dec 31'2018 Interest receivable DR 4,830.00 To Interest revenue 4,830.00 (193,200*10%*3/12) Oct 01'2019 Cash DR 19,320.00 To Interest receivable 4,830.00 To Interest revenues = 193200 * 10%*9/12 14,490.00 Cash Dr 193,200.00 To Note receivable 193,200.00