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Harrigan Enterprises utilizes Snoopy Systems to design and implement a cash management system. Due to Harrigan’s cash management problems, it cannot currently pay for the system out of pocket. Snoopy chooses to extend a 6% note on January 1, 2013, for the $27,000 project cost.Required: Hide  1.  Prepare Snoopy's journal entry to record the service performed on January 1, 2013.       Account and ExplanationDebitCredit         Record sale with note        2.  Determine how much interest Snoopy will receive if the note is repaid on May 1, 2013.$ Hide  3.  Provide Snoopy's journal entry to record the cash received to pay off the note and interest on May 1, 2013. If an amount box does not require an entry, leave it blank.       Account and ExplanationDebitCredit             Record collection of note plus interest        Check My Work

Question

Harrigan Enterprises utilizes Snoopy Systems to design and implement a cash management system. Due to Harrigan’s cash management problems, it cannot currently pay for the system out of pocket. Snoopy chooses to extend a 6% note on January 1, 2013, for the $27,000 project cost.

Required:


  Hide    

1.  Prepare Snoopy's journal entry to record the service performed on January 1, 2013.



 
 
       
 
Account and Explanation
Debit
Credit
 
 
 
 
 
 
 
 
 
Record sale with note
   
       

 

 

2.  Determine how much interest Snoopy will receive if the note is repaid on May 1, 2013.
$



  Hide    

3.  Provide Snoopy's journal entry to record the cash received to pay off the note and interest on May 1, 2013. If an amount box does not require an entry, leave it blank.



 
 
       
 
Account and Explanation
Debit
Credit
 
 
 
 
 
 
 
 
 
 
 
 
 
Record collection of note plus interest
   
       

 

 
  • Check My Work
check_circleAnswer
Step 1

a)

 

Prepare the journal entry to record the service performed:

Credit
Date
Description
Debit
01.01.13 6% Notes receivables
$27,000
$27,000
Revenue
(To record the receipt of
notes receivables)
help_outline

Image Transcriptionclose

Credit Date Description Debit 01.01.13 6% Notes receivables $27,000 $27,000 Revenue (To record the receipt of notes receivables)

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Step 2

b)

 

Compute the interest receivable:...

4
Interest $27,000 x 6%x-
12
= S540
help_outline

Image Transcriptionclose

4 Interest $27,000 x 6%x- 12 = S540

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