Question

Milner Family Importers sold goods to Tung Decorators for \(30,000 on November 1, 2017, accepting Tung’s \)30,000, 6-month, 6% note. Prepare Milner’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.

Short answer

The debit and credit column of the journal totals$61,200.

Step-by-step solution

Definition of Adjusting Entry

Journal entry prepared by the business entity for updating balances of some temporary accounts is known as adjusting entry. It is generally prepared for deferral and accruals.

Journal entries

Date	Accounts and Explanation	Debit $	Credit $
1 Nov 2017	Note receivable	$30,000
	Sales revenue		$30,000
31 Dec 2017	Interest receivable	$300
	Interest revenue $\left(\$30,000\times 6\%\times \frac{2}{12}\right)$		$300
1 May 2018	Cash	$30,900
	Interest receivable		$300
	Interest revenue $\left(\$30,000\times 6\%\times \frac{4}{12}\right)$		$600
	Note receivable		$30,000
		$61,200	$61,200