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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

NOTES RECEIVABLE ENTRIES M. L. DiMaurizio had the following notes receivable transactions:

images

REQUIRED

Record the transactions in a general journal.

To determine

Prepare journal entry to record the transactions of Company M.L.D.

Explanation

Note receivable:

Note receivable refers to a written promise for the amounts to be received within a stipulated period of time. This written promise is issued by a debtor or, borrower to the lender or creditor. Notes receivable is an asset of a business.

Prepare journal entry to record received payment for sale of merchandise.

DateAccount titles and ExplanationDebitCredit
June 20Notes receivable$2,400
     Sales$2,400
(To record received note for merchandise sale)
July 20Cash$2,412
     Notes receivable$2400
      Interest revenue (1)$12
(Record received payment of note with interest)
July 25Accounts receivable - R.B$5,600
     Sales$5,600
(To record sale made on account)
August 4Cash$600
Notes receivable$5,000
     Accounts receivable - R.B$5,600
(To record cash received and note to settle account)
September 3Cash$5,029.17
     Notes receivable$5,000
     Interest revenue (2)$29.17
(Record received payment of note with interest)
September 10Cash$400
     Notes receivable$2,600
      Interest revenue$3,000
(Record received payment of note with interest)
October 10Cash$613
Notes receivable (new note)$2,000
     Notes receivable (old note)$2,600
      Interest revenue (3)$13
(To record received new note plus interest on old note)
November 9Cash$2,010
     Notes receivable$2,000
      Interest revenue (4)           $10
(Record received payment of note with interest)
November 10Accounts receivable - J. B$5,000
     Sales$5,000
(To record sale made on account)
November 25Cash$1,000
     Notes receivable$4,000
     Accounts receivable – J.B$5,000
(To record cash received and note to settle account)
December 25Accounts receivable B.K$4,021.67
     Notes receivable$4,000
      Interest revenue (5)$21.67
(To record note receivable dishonoured)
January 13Cash$4,035.47
     Accounts receivable B.K$4,021.67
      Interest revenue (6)$13.80
(To record cash collected dishonoured with interest)

Table (1)

Working notes:

(1)Calculate interest revenue...

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