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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 lender or creditor. Notes receivable is an asset of a business.
Interest on note:
Interest on note is the amount charged on the principal value of note for the privilege of borrowing money. Interest is to be paid by the borrower and to be received by the lender.
Dishonored note:
Note receivable refers to a written promise by the debtor for the amounts to be received within a stipulated period of time. Note is otherwise known as promissory note. If this promissory note is not settled by the debtor at its maturity date, then it became is known as dishonored note.
To journalize: The entries, to record the transactions.
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Chapter 8 Solutions
Financial & Managerial Accounting
- The following data relate to notes receivable and interest for Owens Co., a financial services company. (All notes are dated as of the day they are received.)Mar. 8. Received a $33,000, 5%, 60-day note on account.31. Received an $80,000, 7%, 90-day note on account.May 7. Received $33,275 on note of March 8.16. Received a $72,000, 7%, 90-day note on account.June 11. Received a $36,000, 6%, 45-day note on account.29. Received $81,400 on note of March 31.July 26. Received $36,270 on note of June 11.Aug. 4. Received a $48,000, 9%, 120-day note on account.14. Received $73,260 on note of May 16.Dec. 2. Received $49,440 on note of August 4. Instructions Journalize the entries to record the transactions.arrow_forwardA customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer was able to negotiate with the company and transferred the accounts receivable into a note that includes interest, along with an up-front cash payment of $6,000. The note maturity date is 24 months with a 15% annual interest rate. What is the entry to recognize this transfer?arrow_forwardOn June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank. The note has a face value of 15,000 and a maturity value (principal plus interest) of 15,400. The discount is calculated to be 385, and the accrued interest income is 100. The recourse liability is estimated to be 1,000. Prepare the journal entry of Phillips to record the sale of the note receivable.arrow_forward
- Journal Entries for Accounts and Notes ReceivableLancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $18,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $21,000, 120 day, nine percent note from B. Shore Company on account. Dec.16 Received a $17,000, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore's account as uncollectible. Lancaster, Inc., uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $25,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $22,500. Dec.31 Made the…arrow_forwardJournal Entries for Accounts and Notes ReceivableLancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $15,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $18,000, 120 day, nine percent note from B. Shore Company on account. Dec.16 Received a $14,400, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore’s account as uncollectible. Lancaster, Inc., uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $22,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $19,500. Dec.31 Made the…arrow_forwardMar. 17 Received $810 from Shawn McNeely and wrote off the remainder owed of $4,820 as uncollectible. July 29 Reinstated the account of Shawn McNeely and received $4,820 cash in full payment. Journalize the above transactions, using the direct write-off method of accounting for uncollectible receivables. Refer to the Chart of Accounts for exact wording of account titlesarrow_forward
- Ace Distributors has the following transactions related to notes receivable during the last month of the year. Dec. 1 Loaned $15,000 cash to K. Hogan on a 1-year, 6% note. 16 Sold goods to F. Manning, receiving a $4,800, 60-day. 7% note. 31 Accrued interest revenue on all notes receivable. Journalize the transactions for Ace Distributors. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round intermediate calculations to 2 decimal places, eg. 52.75 and final answers to O decimal places e.g. 5,125.) Date Account Titles and Explanation (To record loan made to K. Hogan) (To record sale to F. Manning) (To record accrued interest) Debit Creditarrow_forwardJournalize the following transactions using the direct write-off method of accounting for uncollectible receivables: Feb. 20 Received $1,000 from Andrew Warren and wrote off the remainder owed of $4,000 as uncollectible. May 10 Reinstated the account of Andrew Warren and received $4,000 cash in full payment.arrow_forwardnaruarrow_forward
- Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:Oct. 2. Received $600 from Rachel Elpel and wrote off the remainder owed of $1,350 as uncollectible.Dec. 20. Reinstated the account of Rachel Elpel and received $1,350 cash in full payment.arrow_forwardApr. 15. Received $800 from Jean Tooley and wrote off the remainder owed of $1,200 as uncollectible. Aug. 7. Reinstated the account of Jean Tooley and received $1,200 cash in full payment. Required: Journalize the above transactions, using the direct write-off method of accounting for uncollectible receivables. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS Jean Tooley General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Jean Tooley 129 Allowance for Doubtful Accounts 131 Interest Receivable 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes…arrow_forwardMar. 17 Received $1,080 from Shawn McNeely and wrote off the remainder owed of $4,350 as uncollectible. July 29 Reinstated the account of Shawn McNeely and received $4,350 cash in full payment. Journalize the above transactions, using the direct write-off method of accounting for uncollectible receivables. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTSGeneral Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Shawn McNeely 131 Interest Receivable 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312…arrow_forward
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