EX 9-24 Entries for receipt and dishonor of notes receivable

Journalize the following transactions in the accounts of Jamba Co., which operates a riverboat casino:

Mar.  1. Received an $80,000, 60-day, 6% note dated March 1 from Tomekia Co. on account.
        18. Received a $75,000, 60-day, 8% note dated March 18 from Mystic Co. on account.

Apr. 30. The note dated March 1 from Tomekia Co. is dishonored, and the customer’s account is charged for the note, including interest.

May 17. The note dated March 18 from Mystic Co. is dishonored, and the customer’s account is charged for the note, including interest.

July 29. Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days at 8% on the total amount debited to Tomekia Co. on April 30.

Aug. 23. Wrote off against the allowance account the amount charged to Mystic Co. on May 17 for the dishonored note dated March 18.

Answer:
Mar. 1
Notes Receivable............................................... 80,000  
                Accounts Receivable—Tomekia Co. .........  80,000  
      18
Notes Receivable............................................... 75,000  
               Accounts Receivable—Mystic Co. .............  75,000

Apr. 30
Accounts Receivable—Tomekia Co. ............... 80,800  
              Notes Receivable .........................................  80,000  
              Interest Revenue..........................................  800*  
                   *($80,000 × 6% × 60/360)

May 17
Accounts Receivable—Mystic Co. .................. 76,000  
              Notes Receivable .........................................  75,000  
              Interest Revenue..........................................  1,000*  
                        *($75,000 × 8% × 60/360)

July 29
Cash.................................................................... 82,416  
                Accounts Receivable—Tomeka Co. ..........  80,800  
                Interest Revenue..........................................  1,616*  
                     *($80,800 × 0.08 × 90/360)

Aug. 23
Allowance for Doubtful Accounts.................... 76,000  
              Accounts Receivable—Mystic Co. .............  76,000

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