Question

Crane Co. has the following transactions related to notes receivable during the last 2 months of the year. The company does not make entries to accrue interest except at December 31.

Nov. 1 Loaned $66,600 cash to C. Bohr on a 12-month, 6% note.
Dec. 11 Sold goods to K. R. Pine, Inc., receiving a $7,200, 90-day, 6% note.
Dec. 16 Received a $9,600, 180-day, 8% note to settle an open account from A. Murdock.
Dec. 31 Accrued interest revenue on all notes receivable.

Required:
Journalize the transactions for Crane Company

Answer 1

Answer:

Nov 1

Debit : Note Receivable - C. Bohr $66,600

Credit : Cash $66,600

Dec. 11

Debit : Note Receivable - K. R. Pine, Inc. $7,200

Credit : Sales $7,200

Dec. 16

Debit : Cash $9,600

Credit : Note Payable - A. Murdock $9,600

Dec. 31

Debit : Note Receivable - C. Bohr  $666

Debit : Note Receivable - K. R. Pine, Inc. $100.80

Credit : Interest Income $766.80

Dec 31

Debit : Interest expense   $64

Credit : Note Payable - A. Murdock  $64

Explanation:

Interest Income calculations :

Note Receivable - C. Bohr  = $66,600 x 2/12 x 6 % = $666

Note Receivable - K. R. Pine, Inc = $7,200  x 21/ 90  x 6 % = $100.80

Interest expense calculations :

Note Payable - A. Murdock $9,600 x 15 / 180 x 8 % = $64