Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 7, Problem 15SE
To determine
Journalize the transactions for Bank P.
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(Learning Objective 6: Account for notes receivable)1. Compute the amount of interest during 2018, 2019, and 2020 for the following notereceivable: On May 31, 2018, Wyoming State Bank loaned $240,000 to Lindsey Weston ona two-year, 8% note.2. Which party has a/ana. note receivable?b. note payable?c. interest revenue?d. interest expense?3. How much in total would Wyoming State Bank collect if Lindsey Weston paid off the noteearly on November 30, 2018?
(Learning Objective 5: Apply GAAP to uncollectible receivables) At December 31,2018, before any year-end adjustments, the Accounts Receivable balance of HamptonCompany, Inc., is $330,000. The Allowance for Uncollectible Accounts has a $15,400 creditbalance. Hampton prepares the following aging schedule for Accounts Receivable:Age of AccountsTotal Balance 1–30 Days 31–60 Days 61–90 Days Over 90 Days$330,000 $100,000 $70,000 $30,000Estimated uncollectible 0.6% 3.0% 5.0%$130,00040.0%Requirements1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowanceaccount adequate? Too high? Too low?2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.3. Show how Hampton will report Accounts Receivable on its December 31 balance sheet.
4. Jill Hamlin borrowed $40,000 from the bank on August 16, issuing the bank a 12% note.
The entry to record accrued interest on the note on August 31 (15 days later) would include: a
. debit Interest Expense for $197.26 b. debit Interest Payable for $197.26 c. credit Interest
Expense for $407.67 d. credit Interest Payable for $407.67 d. debit Cash for $18,000
Chapter 7 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 7.A - Prob. 1SECh. 7.A - Prob. 2SECh. 7.A - Prob. 3AECh. 7.A - Prob. 4AECh. 7.A - Prob. 5BECh. 7.A - Prob. 6BECh. 7.A - Prob. 7APCh. 7.A - Prob. 8BPCh. 7 - Which duties should be segregated in the...Ch. 7 - Prob. 2DQ
Ch. 7 - Prob. 3DQCh. 7 - Why does the allowance method of accounting for...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How would the net realizable value of Accounts...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1SCCh. 7 - Prob. 2SCCh. 7 - Prob. 3SCCh. 7 - Prob. 4SCCh. 7 - Prob. 5SCCh. 7 - Prob. 6SCCh. 7 - Prob. 7SCCh. 7 - Prob. 8SCCh. 7 - Prob. 9SCCh. 7 - Prob. 10SCCh. 7 - Prob. 11SCCh. 7 - Prob. 12SCCh. 7 - Prob. 1SECh. 7 - Prob. 2SECh. 7 - Prob. 3SECh. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 13SECh. 7 - Prob. 14SECh. 7 - Prob. 15SECh. 7 - Quick ratio (Learning Objective 7) 510 min....Ch. 7 - Prob. 17SECh. 7 - Prob. 18AECh. 7 - Prob. 19AECh. 7 - Prob. 20AECh. 7 - Prob. 21AECh. 7 - Prob. 22AECh. 7 - Prob. 23AECh. 7 - Prob. 24AECh. 7 - Prob. 25AECh. 7 - Prob. 26AECh. 7 - Prob. 27AECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 29AECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Aging of accounts receivable allowance method...Ch. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 41BECh. 7 - Prob. 42APCh. 7 - Prob. 43APCh. 7 - Prob. 44APCh. 7 - Prob. 45APCh. 7 - Prob. 46APCh. 7 - Accounting for notes receivable (Learning...Ch. 7 - Prob. 48APCh. 7 - Prob. 49BPCh. 7 - Prob. 50BPCh. 7 - Prob. 51BPCh. 7 - Prob. 52BPCh. 7 - Prob. 53BPCh. 7 - Prob. 54BPCh. 7 - Prob. 55BPCh. 7 - Continuing Exercise In this exercise, we continue...Ch. 7 - Prob. 1CPCh. 7 - Prob. 1CFSAPCh. 7 - Prob. 1EIACh. 7 - Prob. 2EIACh. 7 - Financial Analysis Purpose: To help familiarize...Ch. 7 - Industry Analysis Purpose: To help you understand...Ch. 7 - Prob. 1SBACh. 7 - Prob. 1WC
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- 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 Casharrow_forwardPlease check my work Keesha Company borrows $250.000 cash on December 1 of the current year by signing a 150-day. 9%. $250.000 note. 1. On what date does this note mature? 2 & 3. What is the amount of interest expense In the current year and the following year from this note? 4. Prepare Journal entrles to record (a) issuance of the note. (by accrual of Interest on December 31, and (c payment of the note at maturity. QUESTION 1. What date does this more mature? (please answer this too)arrow_forwardAccounting for a note receivable On June 6, Lakeland Bank & Trust lent $80,000 to Stephan Stow on a 30-day, 9% note. Requirements Journalize for Lakeland the lending of the money on June 6. Journalize the collection of the principal and interest at maturity. Specify the date. Round to the nearest dollar.arrow_forward
- Journal Entries (Note Issued for Bank Loan) Borrowed $5,000 cash from the bank, giving a 60-day non-interest-bearing note. T July 15 note is discounted 8% by the bank. Sept. 13 Paid the $5,000 note, recognizing the discount as interest expense. Prepare general journal entries for the transactions. Assume 360 days in a year. Page: 1 DOC. POST. DATE ACCOUNT TITLE DEBIT CREDIT NO. REF. 20-- Jul. 15 2 2 3 3 4 4 5 Sept. 13 6 6 7 7 8. 8 9.arrow_forwardCampus Flights takes out a bank loan in the amount of $200,500 on March 1. The terms of the loan include a repayment of principal in ten equal installments, paid annually from March 1. The annual interest rate on the loan is 8%, recognized on December 31. (Round answers to the nearest whole dollar if needed.) A. Compute the interest recognized as of December 31 in year 1 rounded to the whole dollar. B. Compute the principal due in year 1.arrow_forwardA company collects an honored note with a maturity date of 24 months from establishment, a 10% interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of the honored note at maturity date? A. Interest Revenue, Interest Expense, Cash B. Interest Receivable, Cash, Notes Receivable C. Interest Revenue, Interest Receivable, Cash, Notes Receivable D. Notes Receivable, Interest Revenue, Cash, Interest Expensearrow_forward
- On January 26, Elegant Co. borrowed cash from Conrad Bank by issuing a 30-day note with a face amount of $63,600. Assume a 360-day year. a. Determine the proceeds of the note, assuming the note carries an interest rate of 5%.$fill in the blank 1 b. Determine the proceeds of the note, assuming the note is discounted at 5%.$fill in the blank 2arrow_forwardMonty Corp. borrows $68,400 on July 1 from the bank by signing a $68,400, 8%, 1-year note payable.(a)Prepare the journal entry to record the proceeds of the note. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1 enter an account title to record the proceeds of the note on July 1 enter a debit amount enter a credit amount enter an account title to record the proceeds of the note on July 1 enter a debit amount enter a credit amount (b)Prepare the journal entry to record the accrued interest at December 31, assuming adjusting entries are made only at the end of the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title to record the accrued interest on December 31 enter a debit amount enter a credit…arrow_forwardLearning Objective 6: Apply GAAP for notes receivable) Garrett Meals completedthe following selected transactions:2018Oct 31 Sold goods to Rose Foods, receiving a $32,000, three-month 5.5% note. (You dodo not need to make the cost of goods sold journal entry for this transaction.)Dec 31 Made an adjusting entry to accrue interest on the Rose Foods note.2017Jan 31 Collected the Rose Foods note.Nov 11 Loaned $15,800 to Franklin Shops, receiving a 90-day, 9.75% note.Dec 31 Accrued the interest on the Franklin Shops note.Requirements1. Record the transactions in Garrett Meals’ journal. Assume that no sales returns areexpected. Round all amounts to the nearest dollar. Explanations are not required.2. Show what Garrett Meals will report on its comparative classified balance sheet atDecember 31, 2019, and December 31, 2018, for Notes Receivable and Interest Receivablearrow_forward
- P9-31A Accounting for notes receivable and accruing interest Learning Objective 4 1. Note 3 Dec. 18, 2016 Cathy Realty loaned money and received the following notes during 2016. Note Date Principal Amount Interest Rate Term (1) Jun. 1 $ 18,000 8% 1 year (2) Sep. 30 24,000 12% 6 months (3) Oct. 19 10,000 9% 60 days Requirements 1. Determine the maturity date and maturity value of each note. 2. Journalize the entries to establisheach Note Receivable and to record collection of principal and interest at maturity. Include a single adjusting entry on December 31, 2016, the fiscal year-end, to record accrued interest revenue on any applicable note. Explanations are not required.arrow_forwardWhich journal entry below would be properly used to record an issuance of an installment note (borrowing money) from Local Bank on January 1 of this year. The principal of the note is $40,000, interest rate is 6%, terms of the note 5 years, annual payment $9,496. JOURNAL Page 25 date description p.ref. debit CREDIT Jan. 1 (1) (2) Group of answer choices Notes Payable debit $40,000, Cash credit $40,000 Cash debit $9,496, Notes Payable credit $9,496 Cash debit $40,000, Bonds Payable credit $40,000 Cash debit $40,000, Notes Payable credit $40,000arrow_forwardJournal Entries (Note Issued for Bank Loan) July 15 Borrowed $5,000 cash from the bank, giving a 60-day non-interest-bearing note. The note is discounted 8% by the bank. Sept. 13 Paid the $5,000 note, recognizing the discount as interest expense. Prepare general journal entries for the transactions. Assume 360 days in a year DATE ACCOUNT TITLE DEBIT CREDIT 20--Jul. 15 __________ _____ _____ __________ _____ _____ __________ _____ _____ Sept. 13 _________ ______ _____ _________ ______ _____ __________ ______ ______ ________ ______ ______arrow_forward
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