ilm/takeAssignment/takeAssignmentMain.do?inprogress true eBook Calculator Entrie
ID: 2582835 • Letter: I
Question
ilm/takeAssignment/takeAssignmentMain.do?inprogress true eBook Calculator Entries for Receipt and Dishonor of Note Receivable Journalize the following transactions of Trapper Jon's Productions. Assume 360 days in a year. For a compound tran an entry, leave it blank June 23 Sept. 21 Oct. 21 Received a $48,000, 90-day, 8% note dated June 23 from Radon Express Co. on account. The note is dishonored by Radon Express Co. Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount Radon Express Co. on September 21. une 23 Notes Receivable 48.000 48.000 (-- 48.000 Accounts Receivable Radon Express Co.. Notes Receivable Interest Revenue Sept. 21 x Oct. 21 Cash Acounts Receivable-Radon Express Co. Interest Revenue 52.000 X Check My WorkExplanation / Answer
June 23:
In this case, note receivable is an asset; therefore, debited. This is in exchange of accounts receivable; therefore, credited.
Journal
Date
Account titles and explanation
P.ref
Debit
Credit
23/06
Notes receivable
$48,000
Accounts receivable
$48,000
To record receivable of 8%, 90-day note
September 21:
This is exactly 90 days --- June23 to September 21 = 7 + 31 + 31 + 21 = 90.
Once the note is dishonored on maturity, interest would be charged. In that case accounts receivable will be charged more, by the addition of note amount and interest amount.
Interest amount = Note amount × Rate × Days
= $48,000 × 8% × (90/360)
= $960 (after rounding to dollar value)
Journal
Date
Account titles and explanation
P.ref
Debit
Credit
21/09
Accounts receivable
$48,960
Notes receivable
$48,000
Interest revenue
$960
To record dishonor of note on maturity
October 21:
Here the interest would be charged for additional period of 30 days (from 21/09 to 21/10) at 10% rate. The amount of cash is the aggregate of accounts receivable and interest amount.
Interest amount = Accounts receivable amount × Rate × Days
= $48,960 × 10% × (30/360)
= $408 (after rounding to dollar value)
Journal
Date
Account titles and explanation
P.ref
Debit
Credit
21/10
Cash
$49,368
Accounts receivable
$48,960
Interest revenue
$408
To record receiving the dishonored amount together with interest
Date
Account titles and explanation
P.ref
Debit
Credit
23/06
Notes receivable
$48,000
Accounts receivable
$48,000
To record receivable of 8%, 90-day note
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.