Singletary company had the following select trasactions: 2008 Apr. 1, 2008 Accep
ID: 2435270 • Letter: S
Question
Singletary company had the following select trasactions:2008
Apr. 1, 2008 Accepted Wilson Company's 1-year, 12% note in settlement of a $22,211 account receivable.
July 1, 2008 Loaned $29,416 cash to Richard Dent on a 9-month, 10% note.
Dec. 31, 2008 Accrued interest on all notes receivable.
Apr. 1, 2009 Received principal plus interest on the Wilson note.
Apr. 1, 2009 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
July 1, 2008 Loaned $24,800 cash to Richard Dent on a 9-month, 10% note. 5) Apr. 1, 2009 Richard Dent dishonored its note; Singletary expects it will eventually collect. The Note is having a value of $24,800 plus interest of 9 months @10% is due. Hence the entry for dishonour will be made as under: Accounts receivable $26,660 Note receivable $24,800 Interest accrued $ 1,240 (Interest for six months upto 31st Dec.2008) Interest revenue $ 620 (Interest for three months for Jan - Mar 2009)