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Chapter 17, Problem 11SPA

NOTES RECEIVABLE DISCOUNTING Marienau Suppliers had the following transactions:

Chapter 17, Problem 11SPA, NOTES RECEIVABLE DISCOUNTING Marienau Suppliers had the following transactions: REQUIRED Record the

REQUIRED

Record the transactions in a general journal.

Expert Solution & Answer
Check Mark
To determine

Prepare a journal entry to record Suppliers M.

Explanation of Solution

Note receivable:

Note receivable refers to a written promise for the amounts to be received within a stipulated period of time. This written promise is issued by a debtor or, borrower to the lender or creditor. Notes receivable is an asset of a business.

DateAccount titles and ExplanationDebitCredit
March 1Accounts receivable -G.P$5,000
     Sales$5,000
(To record sale made on account)
March 20Notes receivable$5,000
     Accounts receivable - G.P$5,000
(To record received note to settle  account)
March 30Cash (1)$4,984.78
Interest expense (2)$15.22
     Notes receivable$5,000
(To record discount on notes receivable)
April 20Notes receivable$3,000
     Sales$3,000
(To record received note for merchandise sale)
May 5Cash (3)$3,003.49
     Notes receivable$3,000
      Interest revenue (4)$3.49
(To record received payment of note with interest)
June 19Accounts receivable - D. L$3,070
     Cash$3,070
(To record cash paid for dishonoured note)
July 31Cash$3,091.49
     Accounts receivable - D. L$3,070
      Interest revenue (5)$21.49
(To record Collected dishonoured note with interest)
August 1Accounts receivable - A.B$5,600
     Sales$5,600
(To record sale made on account)
August 12Cash$400
Notes receivable$5,200
     Accounts receivable - A.B$5,600
(To record cash received and note to settle account)
September 11Cash (6)$421.67
Notes receivable (new note)$4,800
     Notes receivable (old note)$5,200
      Interest revenue (7)$21.67
(To record received new note plus interest on old note)
September 26Cash$4,802.55
     Notes receivable$4,800
      Interest revenue $2.55
(To record received payment of note with interest)
November 10Accounts receivable - A.B$4,888
     Cash$4,888
(To record cash paid for dishonoured note)
December 15Cash$4,916.51
     Accounts receivable - A.B$4,888
     Interest revenue (8)$28.51
(To record Collected dishonoured note with interest)

Table (1)

Working notes:

(1) Calculate cash proceeds.

Cash proceeds =Maturity value Discount amount (Difference in time period)=($5,000+($5,000×6%×90360))($5,075×8%×80360)=$5,075$90.22=$4,984.78

(2) Calculate interest expense.

Interest expense =Notes payableCash proceeds= $5,000$4,984.78=$15.22

(3) Calculate cash proceeds.

Cash proceeds =Maturity value Discount amount (Difference in time period)=($3,000+($3,000×6%×60360))($3,030×7%×45360)=$3,030$26.51=$3,003.49

(4) Calculate interest revenue.

Interest revenue =Cash proceedsNotes receivable= $3,003.49$3,000=$3.49

(5) Calculate interest revenue.

Interest revenue=Notes receivable ×Interest rate×Time period=$3,070×6%×42360=$21.49

(6) Calculate interest revenue.

Interest revenue=Notes receivable ×Interest rate×Time period=$5,200×5%×30360=$21.67

(6) Calculate cash proceeds.

Cash proceeds =Maturity value Discount amount (Difference in time period)=($4,800+($4,800×6%×60360))($4,848×7.5%×45360)=$4,848$45.45=$4,802.55

(7) Calculate interest revenue.

Interest revenue =Cash proceedsNotes receivable= $4,802.55$4,800=$2.55

(8) Calculate interest revenue.

Interest revenue=Notes receivable ×Interest rate×Time period=$4,888×6%×35360=$28.51

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Chapter 17 Solutions

Bundle: College Accounting, Chapters 1-9, Loose-Leaf Version, 22nd + LMS Integrated for CengageNOWv2, 2 terms Printed Access Card for Heintz/Parry's College Accounting, Chapters 1-27, 22nd

Ch. 17 - Prob. 1CECh. 17 - Prob. 2CECh. 17 - Prob. 3CECh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - On which notes receivable and notes payable is it...Ch. 17 - Prob. 11RQCh. 17 - When a business borrows money from a bank on a...Ch. 17 - What kind of account is Discount on Notes Payable,...Ch. 17 - Prob. 14RQCh. 17 - Prob. 15RQCh. 17 - TERM OF A NOTE Calculate total time in days for...Ch. 17 - Prob. 2SEACh. 17 - DETERMINING DUE DATE Determine the due date for...Ch. 17 - JOURNAL ENTRIES (NOTE RECEIVED, RENEWED, AND...Ch. 17 - Prob. 5SEACh. 17 - JOURNAL ENTRIES (ACCRUED INTEREST RECEIVABLE) At...Ch. 17 - JOURNAL ENTRIES (NOTE ISSUED, RENEWED, AND PAID)...Ch. 17 - JOURNAL ENTRIES (NOTE ISSUED FOR BANK LOAN)...Ch. 17 - JOURNAL ENTRIES (ACCRUED INTEREST PAYABLE) At the...Ch. 17 - NOTES RECEIVABLE ENTRIES J. K. Pratt Co. had the...Ch. 17 - NOTES RECEIVABLE DISCOUNTING Marienau Suppliers...Ch. 17 - ACCRUED INTEREST RECEIVABLE The following is a...Ch. 17 - NOTES PAYABLE ENTRIES Milo Radio Shop had the...Ch. 17 - ACCRUED INTEREST PAYABLE The following is a list...Ch. 17 - TERM OF A NOTE Calculate total time in days for...Ch. 17 - CALCULATING INTEREST Using 360 days as the...Ch. 17 - DETERMINING DUE DATE Determine the due date for...Ch. 17 - JOURNAL ENTRIES (NOTE RECEIVED, RENEWED, AND...Ch. 17 - JOURNAL ENTRIES (NOTE RECEIVED, DISCOUNTED,...Ch. 17 - JOURNAL ENTRIES (ACCRUED INTEREST RECEIVABLE) At...Ch. 17 - JOURNAL ENTRIES (NOTE ISSUED, RENEWED, AND PAID)...Ch. 17 - JOURNAL ENTRIES (NOTE ISSUED FOR BANK LOAN)...Ch. 17 - JOURNAL ENTRIES (ACCRUED INTEREST PAYABLE) At the...Ch. 17 - NOTES RECEIVABLE ENTRIES M. L. DiMaurizio had the...Ch. 17 - NOTES RECEIVABLE DISCOUNTING Madison Graphics had...Ch. 17 - ACCRUED INTEREST RECEIVABLE The following is a...Ch. 17 - Prob. 13SPBCh. 17 - ACCRUED INTEREST PAYABLE The following is a list...Ch. 17 - Prob. 1MYWCh. 17 - Rochelle needed to borrow 3,000 for three months...Ch. 17 - Eddie Edwards and Phil Bell own and operate The...Ch. 17 - Prob. 1CP
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