EX 9-23 Entries for receipt and dishonor of note receivable

Journalize the following transactions of Frankenstein Productions:

May  3. Received a $150,000, 120-day, 6% note dated May 3 from Sunrider Co. on account.
Aug. 31. The note is dishonored by Sunrider Co.

Oct. 30. Received the amount due on the dishonored note plus interest for 60 days at 9% on the total amount charged to Sunrider Co. on August 31.

Answer:
May 3
Notes Receivable............................................. 150,000  
                     Accounts Receivable—Sunrider Co. .......  150,000    

Aug. 31
Accounts Receivable—Sunrider Co. ............ 153,000  
                   Notes Receivable .......................................  150,000  
                   Interest Revenue........................................  3,000*  
                        *$150,000 × 0.06 × 120/360

Oct. 30
Cash.................................................................. 155,295  
                    Accounts Receivable—Sunrider Co. .......  153,000  
                    Interest Revenue........................................  2,295*  
                         *$153,000 × 0.09 × 60/360

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