James Howard owns Howard Auto Sales. He periodically borrows money from Bay City State Bank and Trust. He permits some customers to sign short-term notes for their purchases. He usually discounts these notes at the bank. Following are selected transactions that occurred in March 20X1. DATE TRANSACTIONS 20X1 Mar. 4 Mr. Howard borrows $34,560 from the bank on a note payable for the business. Terms of the note are 10 percent interest for 45 days. 11 A 90-day $47,520 note payable to the bank is discounted at a rate of 8 percent. 22 Sold a car to Darnell Jones for $40,320 on a 75-day note receivable, bearing interest at 7 percent. 23 Discounted the Jones note with the bank. The bank charges a discount rate of 10 percent. 25 Sold a car for $48,960 to Henry Thomas. Thomas paid $4,000 cash and signed a 30-day note, bearing interest at 9 percent, for the balance. 28 Alfred Herron's account receivable is overdue. Howard requires him to sign a 8 percent, 30-day note for the balance of $37,440. Additional Data Howard pays all the company’s notes payable on time. Darnell Jones defaults on his $40,320 note and the bank charges the company’s checking account for the maturity value of the note and a service fee of $54. Henry Thomas pays his note on time. Alfred Herron pays his note on time.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

ChapterD: Notes Payable And Notes Receivable

Section: Chapter Questions

Problem 4P

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James Howard owns Howard Auto Sales. He periodically borrows money from Bay City State Bank and Trust. He permits some customers to sign short-term notes for their purchases. He usually discounts these notes at the bank. Following are selected transactions that occurred in March 20X1.

DATE		TRANSACTIONS
20X1
Mar.	4		Mr. Howard borrows $34,560 from the bank on a note payable for the business. Terms of the note are 10 percent interest for 45 days.
	11		A 90-day $47,520 note payable to the bank is discounted at a rate of 8 percent.
	22		Sold a car to Darnell Jones for $40,320 on a 75-day note receivable, bearing interest at 7 percent.
	23		Discounted the Jones note with the bank. The bank charges a discount rate of 10 percent.
	25		Sold a car for $48,960 to Henry Thomas. Thomas paid $4,000 cash and signed a 30-day note, bearing interest at 9 percent, for the balance.
	28		Alfred Herron's account receivable is overdue. Howard requires him to sign a 8 percent, 30-day note for the balance of $37,440.

Additional Data

Howard pays all the company’s notes payable on time.
Darnell Jones defaults on his $40,320 note and the bank charges the company’s checking account for the maturity value of the note and a service fee of $54.
Henry Thomas pays his note on time.
Alfred Herron pays his note on time.

date	general journal	debit	credit
June. 9, 20X1

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