Brighton Corp. issued its own $15,000, 120-day, non-interest- bearing note to a bank. The only payment Brighton will make to the bank is $15,000 at the maturity date of the loan. The bank discounts the note at 8%. What are the proceeds to Brighton? a. $13,800 b. $14,600 c. $15,000 d. $14,500 e. None of the above

Brighton Corp. issued its own $15,000, 120-day, non-interest- bearing note to a bank. The only payment Brighton will make to the bank is $15,000 at the maturity date of the loan. The bank discounts the note at 8%. What are the proceeds to Brighton? a. $13,800 b. $14,600 c. $15,000 d. $14,500 e. None of the above

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 14RE: On June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank....

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A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer was able to negotiate with the company and transferred the accounts receivable into a note that includes interest, along with an up-front cash payment of $6,000. The note maturity date is 24 months with a 15% annual interest rate. What is the entry to recognize this transfer?
Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency? A. $5,000 B. $5,050 C. $20,000 D. $19,950
Computing the Proceeds from the Sale of Notes Receivable Below are several customer notes receivable that were sold without recourse. 1. An 8,000, 60-day, non-interest-bearing note sold after 15 days at 12%. 2. A 9,000, 12%, 60-day note sold alter 30 days at 14% 3. A 6,000, 10%, 90-day note sold after 30 days at 12% 4. A 10,000, 12%, 120-day note sold after 45 days at 15% Determine the proceeds from each of the preceding sales of customer notes receivable. (Assume a 360-day year.)
A company collects an honored note with a maturity date of 24 months from establishment, a 10% interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of the honored note at maturity date? A. Interest Revenue, Interest Expense, Cash B. Interest Receivable, Cash, Notes Receivable C. Interest Revenue, Interest Receivable, Cash, Notes Receivable D. Notes Receivable, Interest Revenue, Cash, Interest Expense
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the loan principal, paid annually. Assume no interest is paid or accumulated on the loan until the final repayment. How much of the loan principal is considered a current portion of a noncurrent note payable in year 3? A. $50,000 B. $150,000 C. $100,000 D. $250,000
British Imports is unable to collect on a note worth $215,000 that has accumulated interest of $465. What is the journal entry to record the conversion of the note to accounts receivable?
Element Surfboards issued a $210,800 note on January 1, 2018 to a customer, Leona Marland, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 10.2% annual interest rate. Leona Marland does not pay on her account and dishonors the note. On December 2, 2018, Element Surfboards decides to sell the dishonored note to a collection agency for 30% of its value. Record the journal entries for Element Surfboards for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on October 1, 2018 C. Receivable sale on December 2, 2018
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.
Mystic Magic issued a $120,250 note on January 1, 2018 to a customer, Amy Arnold, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 9.6% annual interest rate. Amy Arnold does not pay on her account and dishonors the note. On November 10, 2018, Mystic Magic decides to sell the dishonored note to a collection agency for 25% of its value. Record the journal entries for Mystic Magic for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on October 1, 2018 C. Receivable sale on November 10, 2018
Lime Co. incurs a $4,000 note with equal principal installment payments due for the next eight years. What is the amount of the current portion of the noncurrent note payable due in the second year? A. $800 B. $1,000 C. $500 D. nothing, since this is a noncurrent note payable
Accounting for Notes Receivable Yarnell Electronics sells computer systems to small businesses. Yarnell engaged in the following activities involving notes receivable: a. On September 1, 2019, Yarnell sold a $10,000 system to Ross Company. Ross gave Yarnell a 6-month, 7% note as payment. b. On December 1, 2019, Yarnell sold a $6,000 system to Searfoss Inc. Searfoss gave Yarnell a 9-month, 9% note as payment. c. On March 1, 2020, Ross paid the amount due on its note. d. On September 1, 2020, Searfoss paid the amount due on its note. Required: Prepare the necessary journal and adjusting entries for Yarnell Electronics to record these transactions.