The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing:

The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing:

20Y3

Nov. 21. Received from McKenna Outer Wear Co., on account, a $96,000, 60-day, 3% note dated November 21 in settlement of a past due account.

Dec. 31. Recorded an adjusting entry for accrued interest on the note of December 3.

20Y4

Jan. 20. Received payment of note and interest from McKenna Outer Wear Co. 

Journalize the entries to record the transactions.

Answer:

20Y3

 Nov. 21 Notes Receivable96,000

Accounts Receivable—McKenna Outer Wear Co. 96,000

 Dec. 31 Interest Receivable320

Interest Revenue320

Accrued interest ($96,000 × 0.03 × 40 ÷ 360).

 20Y4

 Jan. 20 Cash96,480

Notes Receivable96,000

Interest Receivable320

Interest Revenue ($96,000 × 0.03 × 20 ÷ 360) 160