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Business Accounting Loose Leaf for Financial Accounting: Information for Decisions

Journal entries are prepared in the first step of preparation of financial statements. It records dual effect of the transaction i.e. credit and debit that is further used to compute the each account’s ending balance. To prepare: Journal entries and compute the amount and timing of interest revenue for each note receivable. Assumption: There are 360 days in a year. Journal Entry Date Particulars Debit ($) Credit ($) 2018 Dec, 16 Notes receivable-D.T. Accounts receivable (To record acceptance of notes receivable for account receivable.) 10,800 10,800 Dec, 31 Accounts receivable Interest revenue (1) (To record accrued interest revenue on the note.) 36 36 2019 Feb 14 Cash Notes receivable-D.T. Accounts receivable Interest revenue (2) (To record payment received towards note along with the interest.) 10,944 10,800 36 108 Mar 2 Notes receivable-M. Co. Accounts receivable (To record acceptance of notes receivable for account receivable.) 6,100 6,100 Mar 17 Notes receivable-A.P. Accounts receivable (To record acceptance of notes receivable for account receivable.) 2,400 2,400 Apr 16 Accounts receivable Interest revenue (3) Notes receivable-A.P. (To record the dishonored note as accounts receivable.) 2,414 14 2,400 May 31 Accounts receivable Interest revenue (4) Notes receivable-M. Co. (To record the dishonored note as accounts receivable.) 6,222 122 6,100 July 16 Cash Accounts receivable Interest revenue (5) (To record cash received towards M. Co.’s accounts receivable along with additional interest revenue.) 6,284.4 6,222 62.4 Aug 7 Notes receivable-Mu. Co. Accounts receivable (To record acceptance of notes receivable for account receivable.) 7,450 7,450 Sep 3 Notes receivable-N.C. Accounts receivable (To record acceptance of notes receivable for account receivable.) 2,100 2,100 Nov 2 Cash Notes receivable-N.C. Interest revenue (6) (To record cash received towards N.C.’s notes receivable along with interest revenue.) 2,135 2,100 35 Nov 5 Cash Notes receivable-Mu. Co. Interest revenue (7) (To record cash received towards Mu. Co.’s notes receivable along with interest revenue.) 7,574.2 7,450 124.2 Dec 1 Allowance for doubtful accounts Accounts receivable (To record writing off A.P.’s accounts receivable against allowance for doubtful accounts.) 2,414 2,414 Amount of interest can be computed as: 1) Amount = $10,800 Interest rate = 8% p.a. Total tenure = 60 days Tenure = 15 days Interest revenue on Dec 31 would include interest accrued for 15 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $10,800 × 8% × 15 360 Accrued interest revenue = $36 2) Amount = $10,800 Interest rate = 8% p.a. Total tenure = 60 days Tenure = 45 days Interest revenue would include interest revenue for 45 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $10,800 × 8% × 45 360 Accrued interest revenue = $108 3) Amount = $2,400 Interest rate = 7% Tenure = 30 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $2,400 × 7% × 30 360 Accrued interest revenue = $14 4) Amount = $6,100 Interest rate = 8% Tenure = 90 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $6,100 × 8% × 90 360 Accrued interest revenue = $122 5) Amount = $6,100 Interest rate = 8% Tenure = 46 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $6,100 × 8% × 46 360 Accrued interest revenue = $62 .4 6) Amount = $2,100 Interest rate = 10% Tenure = 60 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $2,100 × 10% × 60 360 Accrued interest revenue = $35 7) Amount = $7,450 Interest rate = 10% Tenure = 90 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $7,450 × 10% × 60 360 Accrued interest revenue = $124 .2

Journal entries are prepared in the first step of preparation of financial statements. It records dual effect of the transaction i.e. credit and debit that is further used to compute the each account’s ending balance. To prepare: Journal entries and compute the amount and timing of interest revenue for each note receivable. Assumption: There are 360 days in a year. Journal Entry Date Particulars Debit ($) Credit ($) 2018 Dec, 16 Notes receivable-D.T. Accounts receivable (To record acceptance of notes receivable for account receivable.) 10,800 10,800 Dec, 31 Accounts receivable Interest revenue (1) (To record accrued interest revenue on the note.) 36 36 2019 Feb 14 Cash Notes receivable-D.T. Accounts receivable Interest revenue (2) (To record payment received towards note along with the interest.) 10,944 10,800 36 108 Mar 2 Notes receivable-M. Co. Accounts receivable (To record acceptance of notes receivable for account receivable.) 6,100 6,100 Mar 17 Notes receivable-A.P. Accounts receivable (To record acceptance of notes receivable for account receivable.) 2,400 2,400 Apr 16 Accounts receivable Interest revenue (3) Notes receivable-A.P. (To record the dishonored note as accounts receivable.) 2,414 14 2,400 May 31 Accounts receivable Interest revenue (4) Notes receivable-M. Co. (To record the dishonored note as accounts receivable.) 6,222 122 6,100 July 16 Cash Accounts receivable Interest revenue (5) (To record cash received towards M. Co.’s accounts receivable along with additional interest revenue.) 6,284.4 6,222 62.4 Aug 7 Notes receivable-Mu. Co. Accounts receivable (To record acceptance of notes receivable for account receivable.) 7,450 7,450 Sep 3 Notes receivable-N.C. Accounts receivable (To record acceptance of notes receivable for account receivable.) 2,100 2,100 Nov 2 Cash Notes receivable-N.C. Interest revenue (6) (To record cash received towards N.C.’s notes receivable along with interest revenue.) 2,135 2,100 35 Nov 5 Cash Notes receivable-Mu. Co. Interest revenue (7) (To record cash received towards Mu. Co.’s notes receivable along with interest revenue.) 7,574.2 7,450 124.2 Dec 1 Allowance for doubtful accounts Accounts receivable (To record writing off A.P.’s accounts receivable against allowance for doubtful accounts.) 2,414 2,414 Amount of interest can be computed as: 1) Amount = $10,800 Interest rate = 8% p.a. Total tenure = 60 days Tenure = 15 days Interest revenue on Dec 31 would include interest accrued for 15 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $10,800 × 8% × 15 360 Accrued interest revenue = $36 2) Amount = $10,800 Interest rate = 8% p.a. Total tenure = 60 days Tenure = 45 days Interest revenue would include interest revenue for 45 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $10,800 × 8% × 45 360 Accrued interest revenue = $108 3) Amount = $2,400 Interest rate = 7% Tenure = 30 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $2,400 × 7% × 30 360 Accrued interest revenue = $14 4) Amount = $6,100 Interest rate = 8% Tenure = 90 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $6,100 × 8% × 90 360 Accrued interest revenue = $122 5) Amount = $6,100 Interest rate = 8% Tenure = 46 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $6,100 × 8% × 46 360 Accrued interest revenue = $62 .4 6) Amount = $2,100 Interest rate = 10% Tenure = 60 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $2,100 × 10% × 60 360 Accrued interest revenue = $35 7) Amount = $7,450 Interest rate = 10% Tenure = 90 days Interest revenue would include interest revenue for 30 days. Accrued interest revenue = Amount × Interest rate × Tenure Accrued interest revenue = $7,450 × 10% × 60 360 Accrued interest revenue = $124 .2

Solution Summary: The author explains that journal entries are prepared in the first step of preparation of financial statements.

Loose Leaf for Financial Accounting: Information for Decisions

Loose Leaf for Financial Accounting: Information for Decisions

9th Edition

ISBN: 9781260158762

Author: John J Wild

Publisher: McGraw-Hill Education

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Loose Leaf for Financial Accounting: Information for Decisions

Ch. 7 - Prob. 1DQ Ch. 7 - Prob. 2DQ Ch. 7 - Prob. 3DQ Ch. 7 - Prob. 4DQ Ch. 7 - Prob. 5DQ Ch. 7 - Prob. 6DQ Ch. 7 - Prob. 7DQ Ch. 7 - Prob. 8DQ Ch. 7 - Prob. 9DQ Ch. 7 - Prob. 10DQ

Ch. 7 - Prob. 1QS Ch. 7 - Solstice Company determines on October 1 that it...Ch. 7 - Solstice Company determines on October 1 that it...Ch. 7 - The following list describes aspects of either the...Ch. 7 - Gomez Corp. uses the allowance method to account...Ch. 7 - Prob. 6QS Ch. 7 - Prob. 7QS Ch. 7 - Prob. 8QS Ch. 7 - On August 2, Jun Co. receives a $6,000, 90-day,...Ch. 7 - Prob. 10QS Ch. 7 - Prob. 11QS Ch. 7 - Prob. 12QS Ch. 7 - Prob. 13QS Ch. 7 - Prob. 14QS Ch. 7 - Prob. 1E Ch. 7 - Prob. 2E Ch. 7 - Prob. 3E Ch. 7 - Prob. 4E Ch. 7 - Prob. 5E Ch. 7 - Prob. 6E Ch. 7 - Prob. 7E Ch. 7 - Prob. 8E Ch. 7 - Prob. 9E Ch. 7 - Prob. 10E Ch. 7 - Prob. 11E Ch. 7 - Prob. 12E Ch. 7 - Prob. 13E Ch. 7 - Prob. 14E Ch. 7 - Prob. 15E Ch. 7 - Prob. 16E Ch. 7 - Prob. 17E Ch. 7 - Prob. 18E Ch. 7 - Prob. 1PSA Ch. 7 - Prob. 2PSA Ch. 7 - Prob. 3PSA Ch. 7 - Prob. 4PSA Ch. 7 - The following selected transaction are Ohlm...Ch. 7 - Prob. 1PSB Ch. 7 - At December 31, 2018, Ingleton Company reports the...Ch. 7 - Prob. 3PSB Ch. 7 - Prob. 4PSB Ch. 7 - Prob. 5PSB Ch. 7 - Prob. 7SP Ch. 7 - Prob. 1GLP Ch. 7 - Prob. 1FSA Ch. 7 - Prob. 2FSA Ch. 7 - Prob. 3FSA Ch. 7 - Prob. 1BTN Ch. 7 - Prob. 2BTN Ch. 7 - Prob. 4BTN Ch. 7 - Sheryl Sandberg and Mark Zuckerberg of Facebook...

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