ABC company received a two-year note receivable, bearing 7% interest on November 1, 20X1. Interest on the note is due monthly on the first day of each month. The principal of the note, which is $10,000 is due on maturity. When receiving the note on November 1, ABC debited note receivable for $11,200 and credited sales. When receiving the interest on December 1, 20X1, they debited cash and credited note receivable. ABC recorded no other entries for this note during 20X1. The market interest rate when the note was issued was 9%. Prepare one journal entry dated December 31, 20X1 to correct any errors made.

ABC company received a two-year note receivable, bearing 7% interest on November 1, 20X1. Interest on the note is due monthly on the first day of each month. The principal of the note, which is $10,000 is due on maturity. When receiving the note on November 1, ABC debited note receivable for $11,200 and credited sales. When receiving the interest on December 1, 20X1, they debited cash and credited note receivable. ABC recorded no other entries for this note during 20X1. The market interest rate when the note was issued was 9%. Prepare one journal entry dated December 31, 20X1 to correct any errors made.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 14RE: On June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank....

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