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Elburn Supply Co. has the following transactions related to notes receivable during the last 2 months of 2022. The company does not make entries to accrue interest except at December 31. Nov. 1 Loaned $30,000 cash to Manny Lopez on a 12 month, 10% note. Dec. 11 Sold goods to Ralph Kremer, Inc., receiving a $6.750, 90-day, 8% note. 16 Received a $4,000, 100 day, 9% note to settle an open account from Joe Fernetti. 31 Accrued interest revenue on all notes receivable. (a)

Elburn Supply Co. has the following transactions related to notes receivable during the last 2 months of 2022. The company does not make entries to accrue interest except at December 31. Nov. 1 Loaned $30,000 cash to Manny Lopez on a 12 month, 10% note. Dec. 11 Sold goods to Ralph Kremer, Inc., receiving a $6.750, 90-day, 8% note. 16 Received a $4,000, 100 day, 9% note to settle an open account from Joe Fernetti. 31 Accrued interest revenue on all notes receivable. (a)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Case Study: Elburn Supply Co. - Transactions Related to Notes Receivable Elburn Supply Co. has engaged in several transactions involving notes receivable during the last two months of 2022. The company’s policy is to accrue interest only at the end of the fiscal year, December 31. #### Transactions Overview: **November 1:** - Loaned $30,000 cash to Manny Lopez on a 12-month, 10% note. **December 11:** - Sold goods to Ralph Kremer, Inc., receiving a $6,750, 90-day, 8% note. **December 16:** - Received a $4,000, 180-day, 9% note to settle an open account from Joe Ferretti. **December 31:** - Accrued interest revenue on all notes receivable. #### Journal Entries Below are the journal entries for Elburn Supply Co.: > **Note:** Ignore entries for the cost of goods sold. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Use a 360-day year for calculations. Round answers to 0 decimal places (e.g., 5,275). Record journal entries in the order presented in the problem. | Date | Account Titles and Explanation | Debit | Credit | |------------|--------------------------------------------|-------------|-------------| | | | | | | | | | | | | | | | | | | | | ### Detailed Explanations of the Transactions: **1. Loan to Manny Lopez (Nov 1):** - Issued a 12-month note with a principal amount of $30,000 and an annual interest rate of 10%. **2. Sale to Ralph Kremer, Inc. (Dec 11):** - Sold goods for $6,750, securing a 90-day note with an 8% annual interest rate. **3. Settlement of Open Account from Joe Ferretti (Dec 16):** - Received a $4,000 note with a 180-day term and an annual interest rate of 9%. **4. Accrual of Interest Revenue (Dec 31):** - Calculated based on the notes receivable issued throughout the period. ### Understanding the Journal Entries: - **Date**: Date of transaction. -
Transcribed Image Text:### Case Study: Elburn Supply Co. - Transactions Related to Notes Receivable Elburn Supply Co. has engaged in several transactions involving notes receivable during the last two months of 2022. The company’s policy is to accrue interest only at the end of the fiscal year, December 31. #### Transactions Overview: **November 1:** - Loaned $30,000 cash to Manny Lopez on a 12-month, 10% note. **December 11:** - Sold goods to Ralph Kremer, Inc., receiving a $6,750, 90-day, 8% note. **December 16:** - Received a $4,000, 180-day, 9% note to settle an open account from Joe Ferretti. **December 31:** - Accrued interest revenue on all notes receivable. #### Journal Entries Below are the journal entries for Elburn Supply Co.: > **Note:** Ignore entries for the cost of goods sold. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Use a 360-day year for calculations. Round answers to 0 decimal places (e.g., 5,275). Record journal entries in the order presented in the problem. | Date | Account Titles and Explanation | Debit | Credit | |------------|--------------------------------------------|-------------|-------------| | | | | | | | | | | | | | | | | | | | | ### Detailed Explanations of the Transactions: **1. Loan to Manny Lopez (Nov 1):** - Issued a 12-month note with a principal amount of $30,000 and an annual interest rate of 10%. **2. Sale to Ralph Kremer, Inc. (Dec 11):** - Sold goods for $6,750, securing a 90-day note with an 8% annual interest rate. **3. Settlement of Open Account from Joe Ferretti (Dec 16):** - Received a $4,000 note with a 180-day term and an annual interest rate of 9%. **4. Accrual of Interest Revenue (Dec 31):** - Calculated based on the notes receivable issued throughout the period. ### Understanding the Journal Entries: - **Date**: Date of transaction. -
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