Ramsey Company issues an $550,000, 45-day note to Buckner Company for merchandise inventory. Buckner discounts the note at 4%. Required:A.Journalize Ramsey’s entries to record (refer to the company’s Chart of Accounts for exact wording of account titles):1.the issuance of the note on January 1.2.the payment of the note at maturity. Assume a 360-day year.B.Journalize Buckner’s entries to record (refer to the company’s Chart of Accounts for exact wording of account titles):1.the receipt of the note on January 1.2.the receipt of the payment of the note at maturity. Assume a 360-day year.

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Asked Dec 9, 2019
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Ramsey Company issues an $550,000, 45-day note to Buckner Company for merchandise inventory. Buckner discounts the note at 4%.
  Required:
A. Journalize Ramsey’s entries to record (refer to the company’s Chart of Accounts for exact wording of account titles):
1. the issuance of the note on January 1.
2. the payment of the note at maturity. Assume a 360-day year.
B. Journalize Buckner’s entries to record (refer to the company’s Chart of Accounts for exact wording of account titles):
1. the receipt of the note on January 1.
2. the receipt of the payment of the note at maturity. Assume a 360-day year.
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Expert Answer

Step 1

Given:

Issue price of notes = $550,000

Tim period = 45 days

Buckner’s discount rate = 4%

As the rate of interest payable on the notes is not given, it is not considered.

Step 2

Journal Entries in the ...

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Journal entry in the books of Ramsey Company Post Date Particulars Ref Debit Credit Cash A/c Dr 550000 To Notes Payable A/c (Being, notes issued to Buckner company for merchandise inventory purchase) 550000 Notes Payable A/c Dr 550000 To Cash A/c 550000 (Being, repayment of notes)

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