Question
Larry Jim owns a toy shop called Larry's Toys. The total accounts receivable balance of Larry's Toys on December 31, 2010 was $100,000. On January
Larry Jim owns a toy shop called Larry's Toys. The total accounts receivable balance of Larry's Toys on December 31, 2010 was $100,000. On January 1, 2011, Mr. L. Smith who owes the company $15,000 informs that he will be unable to pay the amount owing in the present year. However, he agrees to sign a two-year note to be paid in semi-annual installments, plus interest at the annual rate of3% on the balance outstanding. The company's year end is December 31.
a) Calculate the interest revenue and payment amounts for each year.
Do not enter dollar signs or commas in the input boxes.
Round your answers to the nearest whole dollar.
Date Opening Balance (a) Interest (b) Total (a+b) Payment Closing Balance Jan 1, 2011 Answer
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Jul 1, 2011 Answer
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Jan 1, 2012 Answer
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Jul 1, 2012 Answer
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Jan 1, 2013 Answer
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b) Prepare the journal entry on January 1, 2011 when the note is signed and on July 1, 2011 when the first payment is made.
Enter the credit accounts in alphabetical order.
Date Account Title and Explanation Debit Credit Jan 1 Answer
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Issue note receivable to replace accounts receivable
Jul 1 Answer
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Record receipt of interest and principal
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College Accounting Chapters 1- 9
Authors: James A Heintz, Robert W Parry
23rd Edition
1337794783, 978-1337794787
