RecRoom Equipment Company received an $13,200, six-month, 7 percent note to settle an $13,200 unpaid balance owed by a customer. The note is accepted by RecRoom on November 1, causing the company to increase its Notes Receivable and decrease its Accounts Receivable. RecRoom adjusts its records for interest earned to its December 31 year-end. RecRoom receives the interest on the note's maturity date. RecRoom receives the principal on the note's maturity date. Prepare journal entries to record the above transactions for RecRoom.

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Business

Darryl Pruitt

26 November, 05:55

RecRoom Equipment Company received an $13,200, six-month, 7 percent note to settle an $13,200 unpaid balance owed by a customer. The note is accepted by RecRoom on November 1, causing the company to increase its Notes Receivable and decrease its Accounts Receivable. RecRoom adjusts its records for interest earned to its December 31 year-end. RecRoom receives the interest on the note's maturity date. RecRoom receives the principal on the note's maturity date. Prepare journal entries to record the above transactions for RecRoom.

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Jenna Mayo · Answer 1

RecRoom Equipment Company

Date Particulars Debit Credit

1Nov Note Receivable $ 13,200

Account Receivable $ 13,200

RecRoom Equipment Company received an $13,200, six-month, 7 percent note to settle an $13,200 unpaid balance owed by a customer.

31 December Interest Receivable $ 924

Interest Revenue $ 924

To record the accrued interest earned. $13,200*7% = $ 924. As it is for two months the amount would be $ (924/12) * 2 = $ 154

1 May Cash $ 13,662

Interest Income $ 462

Notes Receivable $ 13,200

RecRoom receives the interest on the note's maturity date. RecRoom receives the principal on the note's maturity date.