Recording Notes Receivable: Issuance, Payment, and DefaultTeatree Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment 6 months after issuance. Consider the following transactions, which describe Teatree’s experience with two such notes:On October 31, Teatree accepts a 5-month, 8% note from Customer A in lieu of a $2,900 cash payment for services provided that day.On February 28, Teatree accepts a 6-month, $3,200, 9% note from Customer B in lieu of a $3,200 cash payment for services provided on that day.On March 31, Customer A pays the entire note plus interest in cash.On August 31, Customer B pays the entire note plus interest in cash.Required:Prepare the necessary journal and adjusting entries required to record Transactions a through d in Teatree’s records. If an amount box does not require an entry, leave it blank.a. Oct. 31 - Select -- Select - - Select -- Select -Dec. 31 - Select -- Select - - Select -- Select -b. Feb. 28 - Select -- Select - - Select -- Select -c. Mar. 31 - Select -- Select - - Select -- Select - - Select -- Select - - Select -- Select -d. Aug. 31 - Select -- Select - - Select -- Select - - Select -- Select -

Note receivable A note that is given by a debtor to the payer with respect to the payment of due…

Answered: Teatree Products permits its customers…

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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Recording Notes Receivable: Issuance, Payment, and Default

Teatree Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment 6 months after issuance. Consider the following transactions, which describe Teatree’s experience with two such notes:

On October 31, Teatree accepts a 5-month, 8% note from Customer A in lieu of a $2,900 cash payment for services provided that day.
On February 28, Teatree accepts a 6-month, $3,200, 9% note from Customer B in lieu of a $3,200 cash payment for services provided on that day.
On March 31, Customer A pays the entire note plus interest in cash.
On August 31, Customer B pays the entire note plus interest in cash.

Required:

Prepare the necessary journal and adjusting entries required to record Transactions a through d in Teatree’s records. If an amount box does not require an entry, leave it blank.

a. Oct. 31	- Select -	- Select -
	- Select -	- Select -
Dec. 31	- Select -	- Select -
	- Select -	- Select -
b. Feb. 28	- Select -	- Select -
	- Select -	- Select -
c. Mar. 31	- Select -	- Select -
	- Select -	- Select -
	- Select -	- Select -
	- Select -	- Select -
d. Aug. 31	- Select -	- Select -
	- Select -	- Select -
	- Select -	- Select -

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