On October 12, 2015, Golf Co. received from one of its customers, Ping Co., a $25,500, 7% 90 day note receivable in granting a time extension on Ping's past due account receivable. Golf Co. has a December 31 end. Ping Co. honoured the note at maturity. Prepare the entries for the issuance of the note, the end of year interest adjustment and the collection of the note at maturity. Date Oct 12, 2015 Dec 31, 2015 Jan 10, 2016 Particular Note Receivable Accounts Receivable (Ping Co.) Interest Receivable (Income) Interest Income Cash Note Receivable (Principal) Interest Receivable (Income) Dr. 25,500 445.00 25,945.00 Cr. 25,500 445.00 25,500.00 445.00
On October 12, 2015, Golf Co. received from one of its customers, Ping Co., a $25,500, 7% 90 day note receivable in granting a time extension on Ping's past due account receivable. Golf Co. has a December 31 end. Ping Co. honoured the note at maturity. Prepare the entries for the issuance of the note, the end of year interest adjustment and the collection of the note at maturity. Date Oct 12, 2015 Dec 31, 2015 Jan 10, 2016 Particular Note Receivable Accounts Receivable (Ping Co.) Interest Receivable (Income) Interest Income Cash Note Receivable (Principal) Interest Receivable (Income) Dr. 25,500 445.00 25,945.00 Cr. 25,500 445.00 25,500.00 445.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1: Define Notes Receivable -
Notes Receivable is a promissory note issued by the payer to the payee. It is recorded as an asset on the balance sheet. It carries a fixed term of repayment and a fixed interest rate.
On the basis of issuance term, it will be treated as long-term or short-term.
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