Answered: Prepare the journal entries to record…

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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Question

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Singer Corporation was involved in the following events in the current year:

June 30	Barney Manufacturing gives Singer a $3,000, 11%, 90-day note for merchandise purchased.
July 15	Dillon Construction Co. gives Singer a $9,000, 10%, 60-day note for merchandise originally purchased, on account, on April 20 of the current year.
30	The Barney and Dillon notes are sold with recourse by Singer at its bank at 12%. The estimated fair value of the recourse liability is $1,800.
Sept 15	The bank notifies Singer that the Dillon note was paid.
30	The bank notifies Singer that Barney defaulted on the note and charges the amount of principal, interest, and a fee of $20 against Singer’s bank account.

Prepare the journal entries to record the preceding information on Singer’s accounting records. Assume that the company does not normally sell its notes.

Instructions
Singer Corporation was involved in the following events in the current year:
June 30 Barney Manufacturing gives Singer a $3,000, 11%, 90-day note for merchandise purchased.
July 15 Dillon Construction Co. gives Singer a $9,000, 10%, 60-day note for merchandise originally purchased,
on account, on April 20 of the current year.
30 The Barney and Dillon notes are sold with recourse by Singer at its bank at 12%. The estimated fair
value of the recourse liability is $1,800.
Sept 15 The bank notifies Singer that the Dillon note was paid.
30
The bank notifies Singer that Barney defaulted on the note and charges the amount of principal,
interest, and a fee of $20 against Singer's bank account.
Prepare the journal entries to record the preceding information on Singer's accounting records. Assume that the company does not normally sell
its notes.

PAGE 14
GENERAL JOURNAL
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
2
3
4
5
6
7
9
10
11
12

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