Notes Receivable Water Closet Co. wholesales bathroom fixtures. During the current year ending December 31, Water Closet received the following notes: Date of Note Face Amount Interest Rate Term 1. March 6 $75,000 4 % 60 days 2. April 7 40,000 6 45 days 3. August 12 36,000 5 120 days 4. October 22 27,000 8 30 days 5. November 19 48,000 3 90 days 6. December 15 72,000 5 45 days Instructions Assume 360 days in a year. 1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. Note (a) Due Date (b) Interest Due at Maturity 1. $fill in the blank 2 2. fill in the blank 4 3. fill in the blank 6 4. fill in the blank 8 5. fill in the blank 10 6. fill in the blank 12 2. Illustrate the effects on the accounts and financial statements of the receipt of the amount due on Note 3 at its maturity. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Financial Statement Effects Balance Sheet Assets = Liabilities + Stockholders' Equity + = + Dec. 10. fill in the blank 17 fill in the blank 18 fill in the blank 19 fill in the blank 20 Statement of Cash Flows Income Statement fill in the blank 22 fill in the blank 24 3. Compute the accrued interest on December 31 for Notes 5 and 6. Note 5: $fill in the blank 25 Note 6: $fill in the blank 26

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Notes Receivable

Water Closet Co. wholesales bathroom fixtures. During the current year ending December 31, Water Closet received the following notes:

	Date of Note	Face Amount	Interest Rate	Term
1.	March 6	$75,000		4	%	60	days
2.	April 7	40,000		6		45	days
3.	August 12	36,000		5		120	days
4.	October 22	27,000		8		30	days
5.	November 19	48,000		3		90	days
6.	December 15	72,000		5		45	days

Instructions

Assume 360 days in a year.

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.

Note	(a) Due Date	(b) Interest Due at Maturity
1.		$fill in the blank 2
2.		fill in the blank 4
3.		fill in the blank 6
4.		fill in the blank 8
5.		fill in the blank 10
6.		fill in the blank 12

2. Illustrate the effects on the accounts and financial statements of the receipt of the amount due on Note 3 at its maturity. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Financial Statement Effects

		Balance Sheet
	Assets	=	Liabilities	+	Stockholders' Equity
	+		=		+
Dec. 10.	fill in the blank 17		fill in the blank 18		fill in the blank 19	fill in the blank 20
	Statement of Cash Flows		Income Statement
		fill in the blank 22			fill in the blank 24

3. Compute the accrued interest on December 31 for Notes 5 and 6.

Note 5:	$fill in the blank 25
Note 6:	$fill in the blank 26

4. Illustrate the effects on the accounts and financial statements of the adjustment for accrued interest on December 31 for Notes 5 and 6. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Financial Statement Effects

		Balance Sheet
	Assets	=	Liabilities	+	Stockholders' Equity
	+		=		+
Dec. 31.	fill in the blank 31		fill in the blank 32		fill in the blank 33	fill in the blank 34
	Statement of Cash Flows		Income Statement

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