nkazmirski5991 nkazmirski5991

04-11-2022
Business

Answered

1.on july 1, 20x8, herzog mining lends cash and accepts a $9,000 note receivable that offers 10% interest and is due in nine months. herzog reported its financial statements at the end of fiscal year on december 31, 20x8 (an adjusting entry for interest revenue was recorded). how would herzog record the transaction on april 1, 20x9, when the borrower pays herzog the correct amount owed?

Answer :

Diatrhi Diatrhi

17-11-2022

The journal entries for the payment on April 1, 20x9 would be

Dr. Cash $9,675

Cr. Note Receivable $9,000

Cr. Interest Revenue $400

Cr. Interest Receivable $275

Based on the stories, we could make some journal entries based on the timeline:

When Herzog lends cash to and accept the note receivable offer, Herzog will record the journal entries as:

July 1, 20x8

Dr. Note Receivable (10%p.a, 9 months) $9,000

Cr. Cash $9,000

At the end of the following year, Herzog would accrued the interest for the last 6 months as the interest revenue, hence Herzog will record the following journal entries:

Dec 31, 20x8

Dr. Interest Revenue (6/12 x 10% x $9,000) $400

Cr. Interest Receivable $400

When the borrower payback the notes to Herzog, Herzog will update the journal entries into:

April 1, 20x9

Dr. Cash $9,675

Cr. Note Receivable $9,000

Cr. Interest Revenue $400

Cr. Interest Receivable (3/12 x 10% x $9,000) $275

Learn more about The Notes Receivable here:

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