PR 9-4A Details of notes receivable and related entries

Old Town Co. wholesales bathroom fixtures. During the current fiscal year, Old Town Co. received the following notes:
                    Date                Face Amount      Term              Interest Rate 
1.              Apr. 10                 $45,000          60 days                     4% 
2.              June 24                  18,000           30 days                    6 
3.              July 1                     36,000         120 days                    6 
4.              Oct. 31                  36,000           60 days                    9 
5.              Nov. 15                  54,000          60 days                    6 
6.              Dec. 27                  40,500           30 days                    4

Instructions 
1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. 
2. Journalize the entry to record the dishonor of Note (3) on its due date. 
3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31. 4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January.

Answer:
1.                                       (a)                                                       (b)
Note                             Due Date                                 Interest Due at Maturity  
1.                                    June 9                              $300 ($45,000 × 60/360 × 4%)
2.                                   July 24                             90 ($18,000 × 30/360 × 6%)
3.                                   Oct. 29                             720 ($36,000 × 120/360 × 6%)
4.                                   Dec. 30                             540 ($36,000 × 60/360 × 9%)
5.                                   Jan. 14                             540 ($54,000 × 60/360 × 6%)
6.                                   Jan. 26                             135 ($40,500 × 30/360 × 4%)

2.
Oct. 29
Accounts Receivable................................... 36,720      
                   Notes Receivable....................................  36,000      
                   Interest Revenue.....................................  720

3.
Dec. 31
Interest Receivable ...................................... 432      
                   Interest Revenue.....................................  432      
                       Accrued interest.    
$54,000 × 0.06 × 46/360 = $ 414    
$40,500 × 0.04 × 4/360 =       18    
        Total                            $432

4.
Jan. 14
Cash.............................................................. 54,540      
                  Notes Receivable....................................  54,000      
                  Interest Receivable.................................  414      
                  Interest Revenue.....................................  126*      
                         *$54,000 × 0.06 × 14/360  

       26
Cash.............................................................. 40,635      
                  Notes Receivable....................................  40,500      
                  Interest Receivable.................................  18      
                  Interest Revenue.....................................  117*      
                         *$40,500 × 0.04 × 26/360 

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