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Harold Corporation's accounts at January 1, 20x2 are as follows: Accrued Interest Receivable $16,000 Note Receivable, short term 100,000 Note Receivable, long-term 100,000 The notes receivables are from a major supplier
Harold Corporation's accounts at January 1, 20x2 are as follows: Accrued Interest Receivable $16,000 Note Receivable, short term 100,000 Note Receivable, long-term 100,000 The notes receivables are from a major supplier. Interest for twelve months on all notes was collected on May 1, 20x2 The rate is 12% per annum. The principal on the current notes was collected on May 1, 20x2. The principal on the remaining notes is payable on May 1, 20x5. The Harold Corporation uses reversing entries. Prepare all journal entries relative to these notes for the year 20x2.
Expert Solution
| Journal Entries in the books of Harold Corporation's A/c | Amount ($) | ||
| Date | Particulars | Debit | Credit |
| 1-May-12 | Interest A/c .. Dr | 16,000 | |
| To Accrued Interest Receivable A/c | 16,000 | ||
| Being Interest receivable reversed to book actual income | |||
| 1-May-12 | Cash/ Bank A/c .. Dr | 24,000 | |
| To Interest A/c | 24,000 | ||
| (100,000*12%*2) | |||
| Being Interest received on all notes receivable | |||
| 1-May-12 | Cash/ Bank A/c .. Dr | 100,000 | |
| To Notes receivable -Short term A/c | 100,000 | ||
| Being principal on current notes was collected |
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