On September 1, 2023, Marin Inc. sold goods to Bramble Corp., a new customer. Before shipping the goods, Marin's credit and collections department conducted a credit check and determined that Bramble is a high credit-risk customer. As a result, Marin did not provide Bramble with open credit by recording the sale as an account receivable. Instead, Marin required Bramble to provide a non- interest-bearing promissory note for $43,600 face value, to be repaid in one year. Bramble has a credit rating that requires it to pay 9% interest on borrowed funds. Marin pays 7% interest on a loan recently obtained from its local bank. Marin has a December 31 year end and follows IFRS. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) (b) - Your answer is partially correct. Assume that on the note's maturity date, Bramble informs Marin that it is having cash flow problems and can pay Marin only 80% of the note's face value. After extensive discussions with Bramble's management, Marin's credit and collections department considers the remaining balance of the note uncollectible. Prepare the entry required on Marin's books on the note's maturity date. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cash Loss on Disposal of Receivables Notes Receivable Debit 34,880 8720 Credit 43,600
On September 1, 2023, Marin Inc. sold goods to Bramble Corp., a new customer. Before shipping the goods, Marin's credit and collections department conducted a credit check and determined that Bramble is a high credit-risk customer. As a result, Marin did not provide Bramble with open credit by recording the sale as an account receivable. Instead, Marin required Bramble to provide a non- interest-bearing promissory note for $43,600 face value, to be repaid in one year. Bramble has a credit rating that requires it to pay 9% interest on borrowed funds. Marin pays 7% interest on a loan recently obtained from its local bank. Marin has a December 31 year end and follows IFRS. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) (b) - Your answer is partially correct. Assume that on the note's maturity date, Bramble informs Marin that it is having cash flow problems and can pay Marin only 80% of the note's face value. After extensive discussions with Bramble's management, Marin's credit and collections department considers the remaining balance of the note uncollectible. Prepare the entry required on Marin's books on the note's maturity date. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cash Loss on Disposal of Receivables Notes Receivable Debit 34,880 8720 Credit 43,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On September 1, 2023, Marin Inc. sold goods to Bramble Corp., a new customer. Before shipping the goods, Marin's credit and
collections department conducted a credit check and determined that Bramble is a high credit-risk customer. As a result, Marin did not
provide Bramble with open credit by recording the sale as an account receivable. Instead, Marin required Bramble to provide a non-
interest-bearing promissory note for $43,600 face value, to be repaid in one year. Bramble has a credit rating that requires it to pay
9% interest on borrowed funds. Marin pays 7% interest on a loan recently obtained from its local bank. Marin has a December 31 year
end and follows IFRS.
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
(a)
(b)
Your answer is partially correct.
Assume that on the note's maturity date, Bramble informs Marin that it is having cash flow problems and can pay Marin only 80%
of the note's face value. After extensive discussions with Bramble's management, Marin's credit and collections department
considers the remaining balance of the note uncollectible. Prepare the entry required on Marin's books on the note's maturity
date. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for
the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
Cash
Loss on Disposal of Receivables
Notes Receivable
Debit
34,880
8720
Credit
43,600
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