Water Closet Co. wholesales bathroom fixtures. During the current year ending De
ID: 2571833 • Letter: W
Question
Water Closet Co. wholesales bathroom fixtures. During the current year ending December 31, Water Closet received the following notes: Date Face Amount Term Interest Rate 1. Mar. 6 $75,000 60 days 4% 2. Apr. 7 40,000 45 days 9% 3. Aug. 12 36,000 120 days 7% 4. Oct. 22 27,000 30 days 6% 5. Nov. 19 48,000 90 days 3% 6. Dec. 15 72,000 45 days 5% Required: 1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. Assume a 360-day year. (Note: Round each interest computation to the nearest cent.) 2. Journalize the entry to record the dishonor of Note (3) on its due date. Refer to the Chart of Accounts for exact wording of account titles. 3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. (Note: Round each interest computation to the nearest cent.) 4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January and February. Refer to the Chart of Accounts for exact wording of account titles.
Explanation / Answer
**3)Interest accrued on note 5 till dec31 =48000*.03*42/360=168
Interest accrued on note 6 till dec 31 =72000*.05*16/360 =160
Total :328
Note No Date Face value Due date Interest at maturity 1 March6 75000 march 6+60 days = 5 may 75000*.04*60/360= 500 2 Apr7 40000 April7 +45 days = 22 may 40000*.09*45/360= 450 3 Aug12 36000 Aug12+120 days =10 dec 36000*.07*120/360= 840 4 oct22 27000 Oct 22+ 30 days = 21 Nov 27000*.06*30/360= 135 5 nov19 48000 Nov19+90 days = 17 feb of next year 48000*.03*90/360= 360 6 Dec15 72000 Dec 15 +45 days= 29 jan 72000*.05*45/360= 450Related Questions
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