Buffalo Family Importers sold goods to Tung Decorators for $36,600 on November 1, 2020, accepting Tung's $36,600, 6-month, 6% note. Prepare Buffalo's November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest. (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. Record journal entries in the order presented in the problem.)

note receivable 36,600 debit

sales revenues 36,600 credit

--to record sales to Tung's--

interest receivables 366 debit

interest receivables 366 credit

--to record accrued interest--

cash 37,698 debit

note receivables 36,600 credit

interest receivables 366 credit

interest revenues 732 credit

--to record collection from Tung's note--

Explanation:

From the sale we accepted a note receivable.

adjusitng entry:

On December 31th we accrued the interest on the note:

principal x rate x time

months accrued: 2 (Nov 1st to Dec 31th)

36,600 x 6% x 2/12 = 366

Collection from the note:

total interest:

36,600 x 6% x 6/12 = 1,098

earned for the year: 1,098 - 366 = 732

total proceeds: 36,600 + 1,098 = 37,698