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Note Receivable with interest.

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 __________

Solution Summary

The expert examines note receivables with interest.