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Machete Company Requirement: Prepare Journal Entries Debit Credit

The document contains journal entries for Machete Company related to the sale of land for a note receivable in January, the collection of the note and interest in April, and the accrual of additional interest in December. In January, land was sold for a note receivable, recording the note, land, and gain on sale. In April, cash was collected for the principal and interest on the note, recording interest income and expense. In October, the remaining accounts receivable was collected in cash. In December, additional accrued interest income was recorded.

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620 views1 page

Machete Company Requirement: Prepare Journal Entries Debit Credit

The document contains journal entries for Machete Company related to the sale of land for a note receivable in January, the collection of the note and interest in April, and the accrual of additional interest in December. In January, land was sold for a note receivable, recording the note, land, and gain on sale. In April, cash was collected for the principal and interest on the note, recording interest income and expense. In October, the remaining accounts receivable was collected in cash. In December, additional accrued interest income was recorded.

Uploaded by

Anonn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Machete Company

Requirement: Prepare journal entries Debit Credit

Jan-01 Note receivable 2,000,000


Land 1,500,000
Gain on sale of land 500,000

Apr-01 Cash 2,021,000


Interest expense 29,000
Liability for notes receivable discounted 2,000,000
Interest income 50,000

Principal 2,000,000
Interest (2m*10%*9/12) 150,000
Maturity value 2,150,000
Discount (2,150,000*12%*6/12) 129,000
Net proceeds 2,021,000

Principal 2,000,000
Accrued interest receivable (2m*10%*3/12) 50,000
Carrying amount of NR 2,050,000

Net proceeds 2,021,000


Less: Carrying amount of NR 2,050,000
Interest expense 29,000

Oct-01 Accounts receivable 2,160,000


Cash (2,150,000+10,000) 2,160,000

1 Liability of notes receivable discounted 2,000,000


Note receivable 2,000,000

Dec-31 Cash 2,248,000


Accounts receivable 2,160,000
Interest income (2,160,000*12%%3/12) 64,800

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