The following selected transactions were taken from the books of Ripley Company for Year 1 1. On February 1, Year 1, borrowed $58,000 cash from the local bank. The note had a 7 percent interest rate and was due on June 1, Year 1 2. Cash sales for the year amounted to $225,000 plus sales tax at the rate of 7 percent. 3. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 4 percent of sales 4. Paid the sales tax to the state sales tax agency on $180,000 of the sales. 5. Paid the note due on June 1 and the related interest. 6. On November 1, Year 1, borrowed $44,000 cash from the local bank. The note had a 10 percent interest rate and a one-year term to maturity 7. Paid $3,600 in warranty repairs. 8. A customer has filed a lawsuit against Ripley for $10 million for breach of contract. The company attorney does not believe the suit has merit.

The following selected transactions were taken from the books of Ripley Company for Year 1 1. On February 1, Year 1, borrowed $58,000 cash from the local bank. The note had a 7 percent interest rate and was due on June 1, Year 1 2. Cash sales for the year amounted to $225,000 plus sales tax at the rate of 7 percent. 3. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 4 percent of sales 4. Paid the sales tax to the state sales tax agency on $180,000 of the sales. 5. Paid the note due on June 1 and the related interest. 6. On November 1, Year 1, borrowed $44,000 cash from the local bank. The note had a 10 percent interest rate and a one-year term to maturity 7. Paid $3,600 in warranty repairs. 8. A customer has filed a lawsuit against Ripley for $10 million for breach of contract. The company attorney does not believe the suit has merit.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 11RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...

See similar textbooks

Similar questions

On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.
Dan Dayle started a business by issuing an $92,000 face value note to First State Bank on January 1, Year 1. The note had a 7 percent annual rate of interest and a five-year term Payments of $22,438 are to be made each December 31 for five years. Required: a. What portion of the December 31, Year 1. payment is applied to interest expense and principal? b. What is the principal balance on January 1, Year 2? c. What portion of the December 31, Year 2, payment is applied to interest expense and principal? Note: Round your answers to the nearest dollar amount. a. Interest expense a. Principal b. Principal balance c. Interest expense c. Principal
The following selected transactions were taken from the books of Ripley Company for Year 1: 1. On February 1, Year 1, borrowed $70,000 cash from the local bank. The note had a 6 percent interest rate and was due on June 1, Year 1. 2. Cash sales for the year amounted to $240,000 plus sales tax at the rate of 7 percent. 3. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 1 percent of sales. 4. Paid the sales tax to the state sales tax agency on $210,000 of the sales. 5. Paid the note due on June 1 and the related interest. 6. On November 1, Year 1, borrowed $20,000 cash from the local bank. The note had a 6 percent interest rate and a one-year term to maturity 7. Paid $2.100 in warranty repairs. 8. A customer has filed a lawsuit against Ripley for $1 million for breach of contract. The company attorney does not believe the suit has merit. Required a. Answer the following questions: 1. What amount of cash did Ripley pay for interest during…
The following selected transactions were taken from the books of Ripley Company for Year 1: 1. On February 1, Year 1, borrowed $57,000 cash from the local bank. The note had a 8 percent interest rate and was due on June 1, Year 1. 2. Cash sales for the year amounted to $220,000 plus sales tax at the rate of 8 percent. 3. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 3 percent of sales. 4. Paid the sales tax to the state sales tax agency on $205,000 of the sales. 5. Paid the note due on June 1 and the related interest. 6. On November 1, Year 1, borrowed $50,000 cash from the local bank. The note had a 9 percent interest rate and a one-year term to maturity. 7. Paid $3,500 in warranty repairs. 8. A customer has filed a lawsuit against Ripley for $130,000 for breach of contract. The company attorney does not believe the suit has merit. Required a. Answer the following questions: 1. What amount of cash did Ripley pay for interest during…
Leach Company borrowed $95,000 cash by issuing a note payable on June 1, Year 1. The note had an 6 percent annual rate of interest and a one-year term to maturity. Required: a. What amount of interest expense will Leach recognize for the year ending December 31, Year 1? b. Record the issue of notes payable and recognition of interest on December 31, Year 1, in the accounting equation for Year 1. c. What amount of cash will Leach pay for interest expense in Year 1? d. What is the amount of interest payable as of December 31, Year 1? e. What amount of cash will Leach pay for interest expense in Year 2? f. What amount of interest expense will Leach recognize in Year 2? g. What is the amount of interest payable as of December 31, Year 2? -
Egnab Inc. had the following transactions during the current fiscal year ending December 31 . August 01. They borrowed $100,000 from Valley Bank, signing a 90-days, 7.50% Note Payable. October 15. Egnab Inc. purchased a truck from Trusty Cars for $29,500. Trusty Cars agreed to accept, as full payment, a 5.00%, two months Note for the invoice amount. November 1 Egnab Inc. paid Valley Bank the Note Payable plus the accrued interest. November 15. Egnab Inc. purchased merchandise (inventory) from Easy Food Corp. for $13,900. Easy Food Corp. accepted a 120-days, 6.50% Note as full settlement of the purchase. December 15. The Note Payable to Trusty Cars matured today and Egnab Inc. paid the accrued interest as well as 70.00% of the Note Payable. For the remaining amount, a new Note was issued for 45-days with 9.00% Interest. (show your calculations and round to 2 decimal places, please)   (a) Prepare Journal Entries to record the above transactions. Use a 360-day year in making the Interest…
Sheridan Company obtains $36,800 in cash by signing a 7%, 6-month, $36,800 note payable to First Bank on July 1. Sheridan's fiscal year ends on September 30. What information should be reported for the note payable in the annual financial statements? In the balance sheet, Notes Payable of $ reported as In the income statement, Interest Expense of $ and Interest Payable of $ should be reported under should be
During the fiscal year ended December 31, Swanlee Corporation engaged in the following trans-actions involving notes payable: July 1 Borrowed $20,000 from Weston Bank, signing a 90-day, 12 percent note payable.Sept. 16 Purchased office equipment from Moontime Equipment. The invoice amount was$30,000, and Moontime agreed to accept, as full payment, a 10 percent, three-monthnote for the invoice amount.Oct. 1 Paid Weston Bank the note plus accrued interest.Dec. 1 Borrowed $100,000 from Jean Will, a major corporate stockholder. The corporationissued Will a $100,000, 9 percent, 120-day note payable.Dec. 1 Purchased merchandise inventory in the amount of $10,000 from Listen Corporation.Listen accepted a 90-day, 12 percent note as a full settlement of the purchase. SwanleeCorporation uses a perpetual inventory system.Dec. 16 The $30,000 note payable to Moontime Equipment matured today. Swanlee paid theaccrued interest on this note and issued a new 60-day, 16 percent note payable in theamount…
The following selected transactions for notes receivable are for Marx Limited. May 1 Received a six-month, 5%, $15,120 note on account from Blackstone Limited. Interest is due at maturity. June 30 Accrued interest on the Blackstone note on this date, which is Marx's year end. July 1 Lent $13,200 cash to an employee, Noreen Wong, issuing a three-month, 7% note. Interest is due at the beginning of each month, starting August 1. Aug. 1 Received the interest due from Ms. Wong. Sept. 1 Received the interest due from Ms. Wong. Oct. 1 Received payment in full for the employee note from Ms. Wong. Nov. 1 Wrote off the Blackstone note because Blackstone defaulted. Future payment is not expected. Record the above transactions for Marx Limited. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually if no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in…
On October 1, Ramos Co. signed a $90,000, 60-day discounted note at the bank. The discount rate was 6%, and the note was paid on November 30. (Assume a 360-day year is used for interest calculations.) (a) Journalize the entries for October 1 and November 30. (b) Assume that Ramos Co. signed a 6% interest-bearing note. Journalize the entries for October 1 and November 30.
Clayton Company borrowed $6,000 from the State Bank on April 1, Year 1. one-year note carried a 6% rate of interest. Which the following journal entrie would be required to recognize accrued interest on December 31, Year 1? Multiple Choice Account Title Credit 270 Interest Payable Interest Expense Account Title Debit 270 Debit 360 Credit 360 Interest Expense Cash