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Included in Pharoah Company’s December 31 trial balance is a note receivable of $11,520. The note is a 4-month, 10% note dated October 1. Prepare Pharoah’s December 31 adjusting entry to record $288 of accrued interest, and the February 1 journal entry to record receipt of $11,904 from the borrower. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

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akiran007

Answer:

Pharoah Company

Journal Entries

Date         Particulars                       Debit           Credit

31 Dec        Interest Receivable      $288 Dr.

                        Interest Revenue                       $288 Cr

Calculation Of Interest = $ 11520 * 10 % = $ 1152

For 3 month $ 1152/12 *3=  $288

To record the interest accrued

Feb 1            Cash                      $ 11904 Dr

                          Interest Receivable                       384 Cr

                          Notes Receivable                           $11,520 Cr

Interest for 4 months $ 1152/12 *4=  $ 384

To record the receipt of the notes receivable and the interest accrued.

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