Accounting Help – Notes Receivable Problem?

Updated on August 6, 2022

J Biggs Co. has the following transactions related to notes receivable during the last 2 months of 2010. Journalize the tranasctions and record the collection of the Biggs note at its maturity in 2011.

Nov. 1 Loaned $15,000 cash to Henry Biggs on a 1-year, 10% note.

Dec. 11 Sold goods to Dr. Ppper, Inc., receiving a $6,750, 90-day, 8% note.

Dec 16 Received a $4,000, 6-month, 9% note in exchange for Bob Barker’s outstanding accounts receivable.

Dec 31 Accrued interest revenue on all notes receivable.

Journal: (I Filled out what I Know)

Nov 1st Notes Receivable ????? Debit

Cash ???? Credit

Dec 11th Notes Receivable ?????? Debit

Sales ????? Credit

Dec 16th Notes Receivable ?????? Debit

Acc Receivable ????? Credit

Dec 31st Interest Receivable ???? Debit

Interest Renevue ???? Credit

Maturity Journal:

Cash ?????? Debit

Notes Receivable $15,000 Credit

Interest Renevue ?????? Credit

Interest Receivable $250 Credit

The ???? represents blanks and the numbers I cant figure out. I appreciate your time and help in advance!

1 Answer

  • The amounts are given for each transactions, just fill them in. For the accrued interest at the end of the year you have to calculate each note separately.

    15,000 x 10% x 2/12 =

    6,750 x 8% x 20/360 =

    4,000 x 9% x 15/360 =

    Now add them together

    Collection of Biggs Note

    15,000 x 105 = 1,500 Interest Collected

    15,000 + 1,500 = 16,500 Total Cash Collected

    Dr Cash 16,500

    Cr Interest Revenue 1,250

    Cr Interest Receivable 250

    Cr Notes Receivable 15,000

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