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C&S Marketing (CSM) recently hired a new marketing director, Jeff Otos, for its downtown Minneapolis office....

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Accounting

C&S Marketing (CSM) recently hired a new marketing director,Jeff Otos, for its downtown Minneapolis office. As part of thearrangement, CSM agreed on February 28, 2018, to advance Jeff$50,000 on a one-year, 8 percent note, with interest to be paid atmaturity on February 28, 2019. CSM prepares financial statements onJune 30 and December 31.

Prepare the journal entry CSM will make when the note isestablished, accrue interest on June 30 and December 31, and theinterest and principal payments on February 28, 2019. (Ifno entry is required for a transaction/event, select "No JournalEntry Required" in the first account field. Do not roundintermediate calculations. Round your final answers to whole dollaramount.)

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3.6 Ratings (319 Votes)

Solution:

CSM
Journal Entries
Date Particulars Debit Credit
28-Feb Note receivables Dr $50,000.00
            To Cash $50,000.00
(to record receipt of note)
30-Jun-18 Interest receivables Dr ($50,000*8%*4/12) $1,333.00
            To Interest revenue $1,333.00
(To record interest revenue)
31-Dec-18 Interest receivables Dr ($50,000*8%*6/12) $2,000.00
            To Interest revenue $2,000.00
(To record interest revenue)
28-Feb-19 Cash Dr $54,000.00
            To Note receivables $50,000.00
            To Interest receivables $3,333.00
            To Interest revenue $667.00
(To record collection at maturity)

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