Valley Spa purchased $8,000 in plumbing components from Tubman Co. Valley Spa signed a 60-day, 12% promissory note for $8,000. If the note isdishonored, but Tubman intends to continue collection efforts, what is the journal entry to record the dishonored note? (Use 360 days a year.)Multiple ChoiceDebit Accounts Receivable $8,160; debit Bad Debt Expense $160; credit Notes Recelveble $8,000Debit Bad Debt Expense $8,160; credit.Accounts Recelvable $8,160.Debit Bad Debt Expense $8,000; credit Notes Receiveble $8,000.Debit Accounts Receivable-Valley Spa $8,000; crecit Notes Receivable $8,000.Debit Accounts Receivable-Valley Spe $8.160, credit interest Revenue $160, credit Notes Recevable $8,000Prey10 of 10

Account receivables are considered negotiable instruments. It is classified in the balance sheet…

Valley Spa purchased $8,000 in plumbing components from Tubman Co. Valley Spa signed a 60-day, 12% promissory note for $8,000. If the note is dishonored, but Tubman itends to continue collection efforts, what is the journal entry to record the dishonored note? (Use 360 days a year.) Multiple Choice Debit Accounts Receivable $8,160; debit Bad Debt Expense $160; credit Notes Receivable $8,000 Debit Bad Debt Expense $8,160: credit Accounts Recelvable $8,160. Debit Bad Debt Expense $8,000; credit Notes Receiveble $8,000. Debit Accounts Receivable-Valey Spa $8,000; crecit Notes Recevable $8,000. Debit Accounts Receivable-Valley Spe $8,160, credit Interest Revenue $160, crecit Notes Recelvable $8,000

Valley Spa purchased $8,000 in plumbing components from Tubman Co. Valley Spa signed a 60-day, 12% promissory note for $8,000. If the note is dishonored, but Tubman itends to continue collection efforts, what is the journal entry to record the dishonored note? (Use 360 days a year.) Multiple Choice Debit Accounts Receivable $8,160; debit Bad Debt Expense $160; credit Notes Receivable $8,000 Debit Bad Debt Expense $8,160: credit Accounts Recelvable $8,160. Debit Bad Debt Expense $8,000; credit Notes Receiveble $8,000. Debit Accounts Receivable-Valey Spa $8,000; crecit Notes Recevable $8,000. Debit Accounts Receivable-Valley Spe $8,160, credit Interest Revenue $160, crecit Notes Recelvable $8,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 7MCQ

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On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year: A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5. B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5. C. On August 5, Air Compressors pays its account in full. Record the journal entries to recognize the initial purchase, the conversion plus cash, and the payment.
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Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.