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Transactions involving promissory notes

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Reference no: EM131296400

Akron Corporation engaged in the following transactions involving promissory notes in 20x1 and 20x2.

20x1

Sept. 1 Sold land to Marge Bailey for $150,000. A 6-month, 8 percent note was received in exchange. Cost of the land was $150,000.

Nov. 1 Received a 30-day, non-interest bearing note from Fred Hansen in settlement of his accounts receivable of $2,500.

Dec. 1 Fred Hansen dishonored his note issued 30 days earlier.

Dec. 31 Recorded accrued interest for December on the note received from Marge Bailey.

20x2

Mar. 1 Received payment in full from Marge Bailey. Assume that all interest has already been accrued to the end of February but no cash receipt has been recorded. Journalize these transactions in the journal provided. Explanations are not needed. Akron records adjusting entries monthly.

Note that even though adjusting journal entries are prepared monthly, you are asked to prepare the adjusting journal entry for the interest-bearing note on December 31 only. This journal entry is for one month's worth of interest only.

Reference no: EM131296400

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