On April 23, 2021, Bong Company received from a customer on an overdue account a 90-day, 8%, P500,000 note. On June 7, Bong discounted the note with recourse at Asian Bank at a discount rate of 10% and properly recorded the liability. On maturity date, Bong Company received notice from Asian Bank that the maturity value was appropriately collected without notice of protest. Use a 360-day year. What is the entry required in Bong Company's books on maturity date of the note? a. Dr. Cash, 503,625; Cr. Liability on Discounted Notes Receivable, 503,625 b. Dr. Liability on Discounted Notes Receivable, 503,625; Cr. Notes Receivable, 500,000; Cr. Interest Revenue, 3,625 c. Dr. Liability on Discounted Notes Receivable, 503,625; Dr. Interest Expense, 6,375; Cr. Notes Receivable, 500,000; Cr. Interest Revenue, 10,000 d. No entry required
On April 23, 2021, Bong Company received from a customer on an overdue account a 90-day, 8%, P500,000 note. On June 7, Bong discounted the note with recourse at Asian Bank at a discount rate of 10% and properly recorded the liability. On maturity date, Bong Company received notice from Asian Bank that the maturity value was appropriately collected without notice of protest. Use a 360-day year. What is the entry required in Bong Company's books on maturity date of the note? a. Dr. Cash, 503,625; Cr. Liability on Discounted Notes Receivable, 503,625 b. Dr. Liability on Discounted Notes Receivable, 503,625; Cr. Notes Receivable, 500,000; Cr. Interest Revenue, 3,625 c. Dr. Liability on Discounted Notes Receivable, 503,625; Dr. Interest Expense, 6,375; Cr. Notes Receivable, 500,000; Cr. Interest Revenue, 10,000 d. No entry required
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On April 23, 2021, Bong Company received from a customer on an overdue account a 90-day, 8%, P500,000 note. On June 7, Bong discounted the note with recourse at Asian Bank at a discount rate of 10% and properly recorded the liability.
On maturity date, Bong Company received notice from Asian Bank that the maturity value was appropriately collected without notice of protest. Use a 360-day year.
What is the entry required in Bong Company's books on maturity date of the note?
a. Dr. Cash, 503,625; Cr. Liability on Discounted Notes Receivable, 503,625
b. Dr. Liability on Discounted Notes Receivable, 503,625; Cr. Notes Receivable, 500,000; Cr. Interest Revenue, 3,625
c. Dr. Liability on Discounted Notes Receivable, 503,625; Dr. Interest Expense, 6,375; Cr. Notes Receivable, 500,000; Cr. Interest Revenue, 10,000
d. No entry required
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