Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 74

Notes receivable—interest accrual and collection Agrico, Inc., accepted a 10-month, 13.8% (annual rate), $4,500 note from one of its customers on June 15; interest is payable with the principal at maturity.

Required:

a. Use the horizontal model or write the entry to record the interest earned by Agrico during its fiscal year ended October 31.

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b. Use the horizontal model or write the journal entry to record collection of the note and interest at maturity.

Step 1 of 5

Notes receivable: A note receivable is a written promise to receive cash for a particular amount of money from another party (borrower/debtor) on a future date.