Uniform Supply accepted a $8,800, 90-day, 9% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on January 15 of the next year when the note is paid? (Assume reversing entries are not made.). (Use 360 days a year.)

Question

Ernesto Zimmerman

Business

8 March, 21:06

Uniform Supply accepted a $8,800, 90-day, 9% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on January 15 of the next year when the note is paid? (Assume reversing entries are not made.). (Use 360 days a year.)

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Rafael Miranda · Answer 1

Dr cash ($8800+$33+$165) $8,998

Cr notes receivable $8,800

Cr interest revenue $33

Cr interest receivable $165

Explanation:

As at January 15 when the note is received, there is need to recognize interest revenue for 15 days of January i. e 15/360*9%*$8800=$33

From October 17 to December 31, interest receivable amount already recognized as revenue=75/360*9%*$8800=$165

The actual of amount of notes receivable is the original amount of $8,800