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25 September, 22:23

On March 1, Terrell & Associates provides legal services to Whole Grain Bakery regarding somerecent food poisoning complaints. Legal services total $11,000. In payment for the services, WholeGrain Bakery signs a 9% note requiring the payment of the face amount and interest to Terrell &Associates on September 1.

Required:

For Terrell & Associates, record the acceptance of the note receivable on March 1 and the cashcollection on September 1.

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  1. 25 September, 22:39
    0
    The Journal entries are as follows:

    (i) On march 01,

    Legal service expenses a/c Dr. $11,000

    To notes payable A/c $11,000

    (To record the acceptance of the note receivable)

    (ii) On September 1,

    Notes payable a/c Dr. $11,000

    Interest expense a/c Dr. $495

    To cash a/c $11,495

    (To record the cash collection)

    Workings:

    Interest expense = 11,000 * 9% * (6 : 12)

    = $495
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