Metzler Communications designs and programs a website for a local business. Metz
ID: 2422438 • Letter: M
Question
Metzler Communications designs and programs a website for a local business. Metzler charges $46,000 for the project, and the local business signs an 8% note January 1, 2013.
Prepare the journal entry to record the sale on January 1, 2013.
Determine how much interest Metzler will receive if the note is repaid on October 1, 2013.
Prepare Metzler's journal entry to record the cash received to pay off the note and interest on October 1, 2013. If an amount box does not require an entry, leave it blank.
Explanation / Answer
Metzier Communication Journal Entries Date Particulars Debit Credit 01-Jan-13 Local Business 46000 Revenue 46000 (Metzler charges $46,000 for the project) 01-Oct-13 Local Business 2760 Interest received 2760 (Interest at 8% for 9 months) 01-Oct-13 Cash 48760 Local Business 48760 (Note and Interest amount received) Calculation of interest on 1.10.13 Note amount = $46000 Rate = 8% per annum Hence Interest = (46000*8%/12) * 9 = $2760