Question

Samberg Inc. had the following transactions. Oct. 1 – Sold $11,500 of merchandise on account, 1/10, n/30 to McCormick Industries. Nov. 1 – Received a $11,500, 90-day, 11% note from McCormick Industries to settle its $11,500 unpaid balance. Dec. 31 – Accrued interest on the note. (Round your answer to the nearest whole dollar amount.) Jan. 31 – Received the interest on the note’s maturity date. Jan. 31 – Received the principal on the note’s maturity date. (Round your answer to the nearest whole dollar amount.) Required: Prepare the required journal entries.

Answer 1

Answer:

Below are the Journal Entries for Samberg Inc.

Explanation:

Date Oct 1

Debit: Accounts Receivables $11,500

          Credit: Sales Revenue $11,500

To record merchandise sold on account 1/10, n/30.

Date Nov 1

Debit: Notes Receivables $11,500

          Credit: Accounts Receivables $11,500

To record Notes Receivables.

Date Dec 31

Debit: Interest Receivables $316

          Credit: Interest Revenue $316

To record Accrued Interest.

Interest = Principal x Interest Rate x (No. of Days / Total Days in a Year)

Interest = $11,500 x 11% x (90 / 360)

Interest = $316

Date Jan 31

Debit: Cash $11,816

           Credit: Notes Receivables $11,500

                        Interest Receivables $316

To record Cash Received on maturity date with Interest.