INTERM.ACCT.:REPORTING...-CENGAGENOWV2
3rd Edition
ISBN: 9781337909358
Author: WAHLEN
Publisher: CENGAGE L
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Question
Chapter 6, Problem 7C
1.
To determine
State the manner by which Company H will account sales discount at the date of sale under the net method also specify the rationale for the amount recorded as sales under net method.
2. a
To determine
State the effect of Company H‘s sales revenues and net income when the customers does not take the sales discount under the net method.
2. b
To determine
State the effect of trade discounts on sales revenue and
2. c
To determine
Provide the manner by which the Company H will account for accounts receivable factored on August 1, 2019.
2. d
To determine
State the effect of interest –bearing notes receivable on its
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Hogan Company uses the net method of accounting for sales discounts. Hogan offers trade discounts to variousgroups of buyers.On August 1, 2018, Hogan factored some accounts receivable on a without recourse basis. Hogan incurred afinance charge.Hogan also has some notes receivable bearing an appropriate rate of interest. The principal and total interestare due at maturity. The notes were received on October 1, 2018, and mature on September 30, 2019. Hogan’soperating cycle is less than one year.Required:1. a. Using the net method, how should Hogan account for the sales discounts at the date of sale? What is therationale for the amount recorded as sales under the net method?b. Using the net method, what is the effect on Hogan’s sales revenues and net income when customers do nottake the sales discounts?2. What is the effect of trade discounts on sales revenues and accounts receivable? Why?3. How should Hogan account for the accounts receivable factored on August 1, 2018? Why?4. How should…
(Basic Note and Accounts Receivable Transactions)Part 1: On July 1, 2017, Wallace Company, a calendar-year company, sold special-order merchandise on credit and received inreturn an interest-bearing note receivable from the customer. Wallace Company will receive interest at the prevailing rate for anote of this type. Both the principal and interest are due in one lump sum on June 30, 2018.
InstructionsWhen should Wallace Company report interest revenue from the note receivable? Discuss the rationale for your answer
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Accounting for Notes Receivable
On November 30, 2019, Tucker Products performed computer programming services for Thomas Inc. in exchange for a 5-month, $125,000, 9% note receivable. Thomas paid Tucker the full amount of interest and principal on April 30, 2020.
Required:
Prepare the necessary entries for Tucker to record the transactions described above. For a compound transaction, if an amount box does not require an entry, leave it blank. If required, round amounts to the nearest dollar.
Nov. 30, 2019
Notes Receivable
Sales Revenue
Record issuance of the note
Dec. 31, 2019
Interest Receivable
Interest Income
Record accrued interest income
Apr. 30, 2020
Cash
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Interest Receivable
Interest Income
Chapter 6 Solutions
INTERM.ACCT.:REPORTING...-CENGAGENOWV2
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