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    Note Receivable with interest.

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    On September 1, 2008, Active Networking sold a computer networking system to Finn Motors for $26,000. Finn Motors signed a note with interest at 9%, agreeing to pay the principal and interest in six months. Active Networking's year end is December 31.

    What items would be included on Active Networking's income statement and balance sheet as at December 31, 2008, with respect to this note? Include the accounts and amounts.

    December 31, 2008 Balance Sheet (Current assets)
    Note receivable $ 26000
    Interest receivable ____________

    Income statement for year ended December 31, 2008
    Sales $ 26000
    Interest revenue ______________

    Prepare all the necessary journal entries associated with this note for Active Networking, including the year-end entries and the receipt of payment from Finn Motors on March 1, 2009.

    Sept. 1, 2008 Note receivable 26000
    Sales 26000

    Dec. 31, 2008 Interest receivable ________
    Interest revenue ___________

    Mar. 1, 2009 Cash 26000
    Note receivable __________
    Interest receivable _________
    Interest revenue __________

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    Solution Summary

    The expert examines note receivables with interest.