P8-30A Accounting for notes receivable and accruing interest [35–45 min]
Kelly Realty loaned money and received the following notes during 2012.
| Principal Amount | Interest Rate | Term | |||
| 1) | 1-Aug | $24,000 | 17% | 1 | year |
| 2) | 30-Nov | 18,000 | 6% | 6 | months |
| 3) | 19-Dec | 12,000 | 12% | 30 | days |
Requirements
For each note, compute interest using a 360-day year. Explanations are not required.
1. Determine the due date and maturity value of each note.
2. Journalize the entry to record the inception of each of the three notes and also
journalize a single adjusting entry at December 31, 2012, the fiscal year end, to
record accrued interest revenue on all three notes.
3. Journalize the collection of principal and interest at maturity of all three notes.
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