a. Journalize the above four events on the books of Hampton Construction. b. Indicate the effects of each of the four transactions journalized in part a on the elements of the financial statement shown. Use the code letters I for increase, D for decrease, and NE for no effect.
a. Journalize the above four events on the books of Hampton Construction. b. Indicate the effects of each of the four transactions journalized in part a on the elements of the financial statement shown. Use the code letters I for increase, D for decrease, and NE for no effect.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On August 1, year 1, Hampton Construction received a 4.5 percent, 6-month note receivable from Dusty Roads, one of Hampton
Construction's problem credit customers. Roads had owed $35,500 on an outstanding account receivable. The note receivable was
taken in settlement of this amount. Assume that Hampton Construction makes adjusting entries for accrued interest revenue once
each year on December 31.
1. Record the receipt of the note on August 1 in settlement of the account receivable.
2. Record accrued interest at December 31, year 1.
3. Assume that Dusty Roads pays the note plus accrued interest in full. Record the collection of the principal and interest on January
31, year 2.
4. Assume that Dusty Roads did not make the necessary principal and interest payment on January 31, year 2. Rather, assume that he
defaulted on his obligation. Record the default on January 31, year 2.
Required:
a. Journalize the above four events on the books of Hampton Construction.
b. Indicate the effects of each of the four transactions journalized in part a on the elements of the financial statement shown. Use the
code letters I for increase, D for decrease, and NE for no effect.
Complete this question by entering your answers in the tabs below.
Required A Required B
Journalize the above four events on the books of Hampton Construction.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
intermediate calculations and round your final answers to the nearest dollar amount.
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