RecRoom Equipment Company received a $9,200, six-month, 9 percent note to settle a $9,200 unpaid balance owed by a customer.
1. The note is accepted by RecRoom on November 1, causing the company to increase its Notes Receivable and decrease its Accounts Receivable.
2. RecRoom adjusts its records for interest earned to its December 31 year-end.
3. RecRoom receives the interest on the note's maturity date.
4. RecRoom receives the principal on the note's maturity date.
Required:
Make journal entries:
a) Record the receipt of a note on November 1 for $8,000 to settle an outstanding accounts receivable balance of a customer.
b) Record the interest accrued on the note as of December 31.
c) Record the receipt of the interest on the note’s maturity date.
d) Record the receipt of the payment for the full principal.