Resin Milling issued a $420,000 note on January 1, 2018 to a customer in exchange for merchandise. The merchandise had a cost to Resin Milling of $181,000. The terms of the note are 24-month maturity date on December 31, 2019 at a 7% annual interest rate. The customer does not pay on its account and dishonors the note. Record the journal entries for Resin Milling for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on January 1, 2020, assuming interest has not been recognized before note maturity If an amount box does not require an entry, leave it blank. Jan. 1, 2018   Notes Receivable Notes Receivable     Sales Revenue Sales Revenue   To record sale in exchange for notes receivable, 24-month maturity, 7% interest rate     Jan. 1, 2018   Cost of Goods Sold Cost of Goods Sold     Merchandise Inventory Merchandise Inventory   To record the cost of sale     Jan. 1, 2020   - Select - - Select -     - Select - - Select -     - Select - - Select -   To record conversion of note to Accounts Receivable, dishonored note

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
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Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 15EA: Resin Milling issued a $390,500 note on January 1, 2018 to a customer in exchange for merchandise....
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Resin Milling issued a $420,000 note on January 1, 2018 to a customer in exchange for merchandise. The merchandise had a cost to Resin Milling of $181,000. The terms of the note are 24-month maturity date on December 31, 2019 at a 7% annual interest rate. The customer does not pay on its account and dishonors the note.

Record the journal entries for Resin Milling for the following transactions.

A. Initial sale on January 1, 2018

B. Dishonored note entry on January 1, 2020, assuming interest has not been recognized before note maturity

If an amount box does not require an entry, leave it blank.

Jan. 1, 2018
 
Notes Receivable Notes Receivable
 
 
Sales Revenue Sales Revenue
  To record sale in exchange for notes receivable,
24-month maturity, 7% interest rate
   
Jan. 1, 2018
 
Cost of Goods Sold Cost of Goods Sold
 
 
Merchandise Inventory Merchandise Inventory
  To record the cost of sale    
Jan. 1, 2020
 
- Select - - Select -
 
 
- Select - - Select -
 
 
- Select - - Select -
  To record conversion of note to
Accounts Receivable, dishonored note
 

 

 

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Step 1

Journal Entries: are the first recording of any transaction in the books of accounts. These entries initialize the accounting process of a transaction.

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