Account for notes receivable

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(Learning Objective 5: Account for notes receivable) On August 31, 2012, Nancy Totten borrowed $5,000 from First Interstate Bank. Totten signed a note payable, promising to pay the bank principal plus interest on August 31, 2013. The interest rate on the note is 7%. The accounting year of First Interstate Bank ends on June 30, 2013. Journalize First Interstate Bank’s (a) lending money on the note receivable at August 31, 2012, (b) accrual of interest at June 30, 2013, and (c) collection of principal and interest at August 31, 2013, the maturity date of the note.

Reference no: EM13745987

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