Explanation Note receivable: Note receivable refers to a written promise received by the creditor from the debtor in formal, for the amounts to be settled 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. Notes receivable often used for the credit periods of more than 60 days. Accounts receivable : Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts 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. Journalize the entries to record the transactions. Date Account Title and Explanation Debit ($) Credit ($) January 21 Accounts receivable – Company B 28,000 Sales 28,000 ( To record the sales made on account) January 21 Cost of merchandise sold 16,800 Merchandise inventory 16,800 (To record the cost of merchandise sold) March 18 Notes receivable 28,000 Accounts receivable – Company B 28,000 ( To record the receipt of note on account) May 17 Cash $28,280 Notes receivable $28,000 Interest revenue (1) $280 ( To record the collection of cash on note of march 18) June 15 Accounts receivable – Company P 17,700 Sales 17,700 ( To record the sales made on account) June 15 Cost of merchandise sold 10,600 Merchandise inventory 10,600 (To record the cost of merchandise sold) June 21 Notes receivable 18,000 Cash 18,000 ( To record the loaned amount on note) June 25 Cash 17,700 Accounts receivable – Company P 17,700 ( To record the collection of cash on account) July 21 Notes receivable 18,000 Cash 120 Notes receivable 18,000 Interest revenue (2) 120 ( To record the amount of interest received and renewal of the loan of June 21 ) September 19 Cash 18,270 Notes receivable 18,000 Interest revenue (3) 270 ( To record the collection of cash on note of July 21) September 22 Accounts receivable – Company W 20,000 Sales 20,000 ( To record the sales made on account) September 22 Cost of merchandise sold 12,000 Merchandise inventory 12,000 (To record the cost of merchandise sold) October 14 Notes receivable 20,000 Accounts receivable – Company W 20,000 ( To record the receipt of note on account) November 13 Accounts receivable – Company W $20,100 Notes receivable $20,000 Interest revenue (4) $100 ( To record dishonored note dated October 14) December 28 Cash $20,301 Accounts receivable – Company W $20,100 Interest revenue (5) $201 ( To record collection of cash from the dishonored note from Company W) Working note (1) : For May 17: Calculate the amount of interest revenue. Interest revenue= [ Face amount × Annual interest rate × Time in terms of year ] = [ $28,000 × 6 % 100 × 60 days 360 days ] = $ 280 Working note (2) : For July 21: Calculate the amount of interest revenue

15th Edition

ISBN: 9781337272124

Author: Carl Warren, James M. Reeve, Jonathan Duchac

Publisher: Cengage Learning

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Chapter 9, Problem 6PB

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Journalize the entries to record the transactions.

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The following were selected from among the transactions completed during the current year by Danix Co., an appliance wholesale company:Jan. 21. Sold merchandise on account to Black Tie Co., $28,000. The cost of merchandise sold was $16,800.Mar. 18. Accepted a 60-day, 6% note for $28,000 from Black Tie Co. on account.May 17. Received from Black Tie Co. the amount due on the note of March 18.June 15. Sold merchandise on account to Pioneer Co. for $17,700. The cost of merchandise sold was $10,600.21. Loaned $18,000 cash to JR Stutts, receiving a 30-day, 8% note.25. Received from Pioneer Co. the amount due on the invoice of June 15.July 21. Received the interest due from JR Stutts and a new 60-day, 9% note as a renewal of the loan of June 21. (Record both the debit and the credit to the notes receivable account.)Sept. 19. Received from JR Stutts the amount due on her note of July 21.22. Sold merchandise on account to Wycoff Co., $20,000. The cost of merchandise sold was $12,000.Oct. 14.…

The following items were selected from among the transactions completed by Pioneer Co. during the current year: Mar. 1. Purchased merchandise on account from Galston Co., $360,000, terms n/30. Mar. 31. Issued a 30-day, 5% note for $360,000 to Galston Co., on account. Apr. 30. Paid Galston Co. the amount owed on the note of March 31. June 1. Borrowed $180,000 from Pilati Bank, issuing a 45-day, 4% note. July 1. Purchased tools by issuing a $210,000, 60-day note to Zegna Co., which discounted the note at the rate of 7%. July 16. Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $180,000. (Journalize both the debit and credit to the notes payable account.) Aug. 15. Paid Pilati Bank the amount due on the note of July 16. Aug. 30. Paid Zegna Co. the amount due on the note of July 1. Dec. 1. Purchased office equipment from Taylor Co. for $500,000, paying $120,000 and issuing a series of ten 6% notes for $38,000 each, coming…

The following items were selected from among the transactions completed by O’Donnel Co. during the current year:Jan. 10. Purchased merchandise on account from Laine Co., $240,000, terms n/30.Feb. 9. Issued a 30-day, 4% note for $240,000 to Laine Co., on account.Mar. 11. Paid Laine Co. the amount owed on the note of February 9.May 1. Borrowed $160,000 from Tabata Bank, issuing a 45-day, 5% note.June 1. Purchased tools by issuing a $180,000, 60-day note to Gibala Co., which discounted the note at the rate of 5%.15. Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $160,000. (Journalize both the debit and credit to the notes payable account.)July 30. Paid Tabata Bank the amount due on the note of June 15.30. Paid Gibala Co. the amount due on the note of June 1.Dec. 1. Purchased office equipment from Warick Co. for $400,000, paying $100,000 and issuing a series of ten 5% notes for $30,000 each, coming due at 30-day…

Chapter 9 Solutions

Financial Accounting

Ch. 9 - What are the three classifications of receivables?Ch. 9 - Dans Hardware is a small hardware store in the...Ch. 9 - What kind of an account (asset, liability, etc.)...Ch. 9 - After the accounts are adjusted and closed at the...Ch. 9 - A firm has consistently adjusted its allowance...Ch. 9 - Which of the two methods of estimating...Ch. 9 - Neptune Company issued a note receivable to...Ch. 9 - If a note provides for payment of principal of...Ch. 9 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 9 - The note receivable dishonored in Discussion...

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Journalize the entries to record the transactions.

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Journalize the entries to record the transactions.

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Chapter 9 Solutions