Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 8, Problem 8.32AP
Accounting for notes receivable, dishonored notes, and accrued interest revenue
Consider the following transactions for Jo Jo Music.
| 2016 | |
| Dec. 6 | Received a $9,000, 90-day, 12% note in settlement of an overdue |
| 31 | Made an |
| 31 | Made a closing entry for interest revenue. |
| 2017 | |
| Mar. 6 | Collected the maturity value of the Concord Sounds note. |
| Jun. 30 | Loaned $11,000 cash to Main Street Music, receiving a six-month, 12% note. |
| Oct. 2 | Received a $9,000, 60-day, 12% note for a sale to Salem Sounds. Ignore Cost of Goods Sold. |
| Dec. 1 | Salem Sounds dishonored its note at maturity. |
| 1 | Wrote off the receivable associated with Salem Sounds. (Use the allowance method.) |
| 30 | Collected the maturity value of the Main Street Music note. |
Journalize all transactions for Jo Jo Music. Round all amounts to the nearest dollar. (For notes stated in days, use a 360-day year.)
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Accounting for notes receivable and accruing interest
Carley Realty loaned money and received the following notes during 2018.
Note Date Principal Amount Interest rate term
April 1 $6000 7% 1 year
Sept 30 $12000 6% 6 month
Sept 19 $18000 8% 90 days
Requirements
Determine the maturity date and maturity value of each note.
Journalize the entries to establish each Note Receivable and to record collection of principal and interest at maturity. Include a single adjusting entry on December 31, 2018, the fiscal year-end, to record accrued interest revenue on any applicable note. Explanations are not required. Round to the nearest dollar.
Blue Spruce Corp. lends Dobson industries $ 60000 on August 1, 2017, accepting a 9-month, 6% interest note. If Blue Spruce Corp. accrued interest at its December 31, 2017 year-end, what entry must it make to record the collection of the note and interest at its maturity date?
Cash
62700
Notes Receivable
60000
Interest Revenue
2700
Notes Receivable
60000
Interest Receivable
1500
Interest Revenue
1200
Cash
62700
Cash
62700
Notes Receivable
60000
Interest Receivable
1500
Interest Revenue
1200
Cash
62700
Notes Receivable
62700
1
Chapter 8 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Ch. 8 - Prob. 1QCCh. 8 - When recording credit card or debit card sales...Ch. 8 - Which of the following is a limitation of the...Ch. 8 - The entry to record a write-off of an...Ch. 8 - Brickman Corporation uses the allowance method to...Ch. 8 - Brickmans ending balance of Accounts Receivable is...Ch. 8 - At December 31 year-end, Crain Corporation has an...Ch. 8 - Using the data in the preceding question, what...Ch. 8 - At year-end, Schultz, Inc. has cash of 11,600,...Ch. 8 - Using the data in the preceding question, assume...
Ch. 8 - What is the difference between accounts receivable...Ch. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - When dealing with receivables, give an example of...Ch. 8 - What type of account must the sum of all...Ch. 8 - Prob. 6RQCh. 8 - What are two common methods used when accepting...Ch. 8 - What occurs when a business factors its...Ch. 8 - What occurs when a business pledges its...Ch. 8 - Prob. 10RQCh. 8 - Prob. 11RQCh. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - When using the allowance method, how are accounts...Ch. 8 - Prob. 15RQCh. 8 - Prob. 16RQCh. 8 - How does the percent- of-sales method compute bad...Ch. 8 - How do the percent-of-receivables and aging-of-...Ch. 8 - What is the difference between the...Ch. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23RQCh. 8 - Prob. 24RQCh. 8 - Prob. 8.1SECh. 8 - Prob. 8.2SECh. 8 - Applying the direct write-off method to account...Ch. 8 - Collecting a receivable previously written...Ch. 8 - Prob. 8.5SECh. 8 - Applying the allowance method (percent-of-sales)...Ch. 8 - Applying the allowance method...Ch. 8 - Prob. 8.8SECh. 8 - Prob. 8.9SECh. 8 - Accounting for a note receivable On June 6,...Ch. 8 - Prob. 8.11SECh. 8 - Recording a dishonored note receivable Midway...Ch. 8 - Prob. 8.13SECh. 8 - Defining common receivables terms Match the terms...Ch. 8 - Prob. 8.15ECh. 8 - Journalizing transactions using the direct...Ch. 8 - Use the following information to answer Exercises...Ch. 8 - Use the following information to answer Exercises...Ch. 8 - Accounting for uncollectible accounts using the...Ch. 8 - Journalizing transactions using the direct...Ch. 8 - Journalizing credit card sales, note receivable...Ch. 8 - Journalizing note receivable transactions...Ch. 8 - Journalizing note receivable transactions The...Ch. 8 - Journalizing note receivable transactions Like New...Ch. 8 - Evaluating ratio data Chippewa Carpets reported...Ch. 8 - Prob. 8.26ECh. 8 - Prob. 8.27APCh. 8 - Accounting for uncollectible accounts using the...Ch. 8 - Accounting for uncollectible accounts using the...Ch. 8 - Accounting for uncollectible accounts...Ch. 8 - Accounting for notes receivable and accruing...Ch. 8 - Accounting for notes receivable, dishonored notes,...Ch. 8 - Using ratio data to evaluate a companys financial...Ch. 8 - Prob. 8.34BPCh. 8 - Prob. 8.35BPCh. 8 - Accounting for uncollectible accounts using the...Ch. 8 - Accounting for uncollectible accounts...Ch. 8 - Accounting for notes receivable and accruing...Ch. 8 - Accounting for notes receivable, dishonored notes,...Ch. 8 - Prob. 8.40BPCh. 8 - Prob. 8.41CPCh. 8 - Prob. 8.42PSCh. 8 - Prob. 8.1CTDCCh. 8 - Paulines Pottery has always used the direct...Ch. 8 - Prob. 8.1CTFCCh. 8 - Use Starbucks Corporations Fiscal 2013 Annual...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A 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_forwardK McKean Company has a three-month, $16,000, 6% note receivable from L. Stow that was signed on June 1, 2016. Stow defaults on the loan on September 1. Journalize the entry for McKean to record the default of the loan. (Record debits first, then, credits. Select the explanation on the last line of the journal entry table.) Date 2016 Sept. 1 Accounts Debit Credit HOarrow_forward(Basic Note and Accounts Receivable Transactions)Part 1: On July 1, 2017, Wallace Company, a calendar-year company, sold special-order merchandise on credit and received inreturn an interest-bearing note receivable from the customer. Wallace Company will receive interest at the prevailing rate for anote of this type. Both the principal and interest are due in one lump sum on June 30, 2018. InstructionsWhen should Wallace Company report interest revenue from the note receivable? Discuss the rationale for your answer Part 2: On December 31, 2017, Wallace Company had significant amounts of accounts receivable as a result of credit sales to its customers. Wallace uses the allowance method based on credit sales to estimate bad debts. Past experience indicates a reliable estimate of uncollectible accounts can be developed based on an aging analysis of receivable balances. This pattern is expected to continue. Instructions(a) Discuss the rationale for using the allowance method based on the…arrow_forward
- Please answer no.18 correctly and provide computation. Thank you;)arrow_forward-. A $20,000, 90-day, 8% note payable was issued on November 1, 2015. Which of the following would be included in the journal entry required on the note's maturity date? Oa credit to note payable for $20,400 a credit to cash for $10,000 O a debit to interest expense for $133 a debit to interest payable for $133arrow_forwardSylvestor Systems borrows $161,000 cash on May 15, 2017, by signing a 30-day, 5% note. 1. On what date does this note mature? June 14, 2017 2. Assume the face value of the note equals $161,000, the principal of the loan. (a) Prepare the journal entry to record issuance of the note. Date General Journal Debit Credit May 15 cash 161,000 notes payable 161,000 b) First, complete the table below (picture #2: find the missing total interest) to calculate the interest expense at maturity. Use those calculated values to prepare your journal entry to record payment of the note at maturity. (Use 360 days a year. Round final answers to the nearest whole dollar.)arrow_forward
- Part A: Blue Blaze Company, whose fiscal year ends December 31, complete the following transactions involving notes payable: 2013 Nov. 25 Purchased a new loading cart by issuing a 60-day 10% note for $43,200. Dec. 31 Made the year-end adjusting entry to accrue interest expense. (Round to the nearest cent.) 2014 Jan. 24 Paid off the loading cart note. (Round to the nearest cent.)arrow_forwardA $40,000, four-month, 6.5% note payable was issued on October 1, 2017. Which of the following would be included in the journal entry required on the note's maturity date by the borrower? A a debit to interest expense for $217 B a credit to Note Payable for $40,867 C a debit to Interest Payable for $217 D a credit to Cash for $40,000arrow_forwardAt the end of 2010, the business calculates 2.750 TL of present value for the notes receivables with maturity value of 3.250 TL. Which entry is made on Dec 31, 2010? a. 2.750 debit to 122-D on N/R and credit to 647-D. Int. Rev b. 500 debit to 122-D on N/R and credit to 647- D. Int. Rev c. 2.750 debit to 657- D. Int. Ex and credit to 122-D on N/R d. 500 debit to 657-D. Int. Ex and credit to 122-D on N/Rarrow_forward
- On December 1, 2016, Old Car Co. borrowed money at the bank by signing a 90-day non-interest-bearing note for $24,000 that was discounted at 8%. Which of the following entries is correct? December 31, 2016Interest Expense 160 Discount on Notes Payable 160 December 31, 2016Interest Expense 160 Interest Payable 160 March 1, 2017Note Payable 23,520 Cash 23,520 December 1, 2016Cash 24,000 Note Payable 24,000arrow_forwardPROBLEM 7: KUSINA Inc. had the following long-term receivable account balances at December 31, 2015. Note recelvable from sale of division. P1,500,000 Note receivable from officer 400,000 Transactions during 2015 and other information relating to KUSINA's long-term recelvables were as follows. 1. The P1,500,000 note recelvable is dated May 1, 2015, bears interest at 9%, and represents the balance of the consideration received from the sale of KUSINA's electronics division to York Company. Princbal payments of P500,000 plus appropriate interest are due on May 1, 2016, 2017, and 2018. The first principal and Interest payment was made on May 1, 2016. Collection of the note installments is reasonably assured. 2. The P400,000 note receivable is dated December 31, 2015, bears interest at 8%, and is due on December 31, 2016. The note is due from May Rox, president of KUSINA Inc. and is collateralized by 10,000 shares of KUSINA's ordinary shares.…arrow_forwardHow to do this, please explain. Thank you.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY