Assume that part of accounts and other receivables on Thompson Toys' February 2, 2010, balance sheet is comprised of $43,225,000 of notes receivable. Two notes make up the amount. The first note has a face value of $30,000,000 and bears interest at 7 percent for 90 days. The second note has a face value of $13,225,000 and bears interest at 9 percent for 120 days. Record the journal entry for the collection of the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2. (Omit explanations; assume no interest had been accrued; amounts rounded to nearest dollar.)
Assume that part of accounts and other receivables on Thompson Toys' February 2, 2010, balance sheet is comprised of $43,225,000 of notes receivable. Two notes make up the amount. The first note has a face value of $30,000,000 and bears interest at 7 percent for 90 days. The second note has a face value of $13,225,000 and bears interest at 9 percent for 120 days. Record the journal entry for the collection of the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2. (Omit explanations; assume no interest had been accrued; amounts rounded to nearest dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Assume that part of accounts and other receivables on Thompson Toys' February 2, 2010, balance sheet is comprised of $43,225,000 of
notes receivable. Two notes make up the amount. The first note has a face value of $30,000,000 and bears interest at 7 percent for 90 days.
The second note has a face value of $13,225,000 and bears interest at 9 percent for 120 days. Record the journal entry for the collection of
the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2. (Omit explanations; assume no interest had been accrued;
amounts rounded to nearest dollar.)
Expert Solution
Explanation -
Notes Receivable -
Notes is the documentary evidence is the amount to be paid after certain time interval with fixed rate of interest. Notes receivables is treated as Assets.
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