||(L.O. 6) This exercise reviews the journal entries for various transactions involving notes receivable.
The following transactions occurred during 2014 and pertain to the Aaron Retail Company.
||Accepted a note from R. Greenblatt in settlement of his $2,000 account. The note is due in six months and bears interest at 12%.
||Sold merchandise to C. Lynn for $5,000. Accepted a note due in nine months at 10%.
||Accepted a note from D. Gioia for $6,000 in settlement of his account receivable. The 10% note is due in 180 days.
- Prepare the journal entries to record the receipt of each of the three notes.
- Indicate the due date of each note.
- Assume the first note is collected on its due date. Prepare the appropriate journal entry to record its collection.
- Assume the accounting period ends on December 31. Prepare the appropriate adjusting entry(s) at December 31, 2014, to record accrued interest on the second and third notes.
- Assume the second note is honored on its maturity date. Prepare the journal entry to record this transaction.
- Assume the third note is dishonored on its due date. Aaron expects eventual collection. Prepare the appropriate journal entry.