COLLEGE ACCOUNTING, CHAPTERS 1-27 2T
COLLEGE ACCOUNTING, CHAPTERS 1-27 2T
22nd Edition
ISBN: 9781305930377
Author: HEINTZ
Publisher: CENGAGE L
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Chapter 17, Problem 11SPB

NOTES RECEIVABLE DISCOUNTING Madison Graphics had the following notes receivable transactions:

Chapter 17, Problem 11SPB, NOTES RECEIVABLE DISCOUNTING Madison Graphics had the following notes receivable transactions: , example  1

Chapter 17, Problem 11SPB, NOTES RECEIVABLE DISCOUNTING Madison Graphics had the following notes receivable transactions: , example  2

REQUIRED

Record the transactions in a general journal.

Expert Solution & Answer
Check Mark
To determine

Prepare a journal entry to record Suppliers MG.

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
May 1Accounts receivable -L.C$5,600
     Sales$5,600
(To record sale made on account)
May 20Notes receivable$5,600
     Accounts receivable - L.C$5,600
(To record received note to settle  account)
May 30Cash (1)$5,589.27
Interest expense (2)$10.73
     Notes receivable$5,600
(To record discount on notes receivable)
June 20Notes receivable$2,400
     Sales$2,400
(To record received note for merchandise sale)
July 25Cash (3)$2,411.37
     Notes receivable$2,400
      Interest revenue (4)$11.37
(To record received payment of note with interest)
August 19Accounts receivable - P.A$2,454
     Cash$2,454
(To record cash paid for dishonoured note)
August 31Cash$2,458.91
     Accounts receivable - D. L$2,454
      Interest revenue (5)$4.91
(To record Collected dishonoured note with interest)
September 1Accounts receivable - B.F$6,400
     Sales$6,400
(To record sale made on account)
September 12Cash$400
Notes receivable$5,600
     Accounts receivable - A.B$6,000
(To record cash received and note to settle account)
October 12Cash (6)$432.50
Notes receivable (new note)$5,600
     Notes receivable (old note)$6,000
      Interest revenue (7)$32.50
(To record received new note plus interest on old note)
October 26Cash$5,607.42
     Notes receivable$5,600
      Interest revenue $7.42
(To record received payment of note with interest)
December 11Accounts receivable – B.F$5,695.33
     Cash$5,695.33
(To record cash paid for dishonoured note)
December 27Cash$5,713.05
     Accounts receivable - A.B$5,695.33
     Interest revenue (8)$17.72
(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)=($5,600+($5,600×6%×90360))($5,684×7.5%×80360)=$5,684$94.73=$5,589.27

(2)Calculate interest expense.

Interest expense =Notes payableCash proceeds= $5,600$5,589.27=$10.73

(3)Calculate cash proceeds.

Cash proceeds =Maturity value Discount amount (Difference in time period)=($2,400+($2,400×6%×60360))($2,424×7.5%×25360)=$2,424$12.63=$2,411.37

(4)Calculate interest revenue.

Interest revenue =Cash proceedsNotes receivable= $2,411.37$2,400=$11.37

(5)Calculate interest revenue.

Interest revenue=Notes receivable ×Interest rate×Time period=$2,454×6%×12360=$4.91

(6)Calculate interest revenue.

Interest revenue=Notes receivable ×Interest rate×Time period=$6,000×6.5%×30360=$32.50

(6)Calculate cash proceeds.

Cash proceeds =Maturity value Discount amount (Difference in time period)=($5,600+($5,600×7%×60360))($5,665.33×8%×46360)=$5,665.33$57.91=$5,607.42

(7)Calculate interest revenue.

Interest revenue =Cash proceedsNotes receivable= $5,607.42$5,600=$7.42

(8)Calculate interest revenue.

Interest revenue=Notes receivable ×Interest rate×Time period=$5,695.33×7%×16360=$17.72

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Chapter 17 Solutions

COLLEGE ACCOUNTING, CHAPTERS 1-27 2T

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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