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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Notes Receivable

Metzler Communications designs and programs a website for a local business. Metzler charges

$46,000 for the project, and the local business signs an 8% note January 1, 2019.

Required:

1. Prepare the journal entry to record the sale on January 1, 2019.

2. Determine how much interest Metzler will receive if the note is repaid on October 1, 2019.

3. Prepare Metzler’s journal entry to record the cash received to pay off the note and interest on October 1, 2019.

To determine

(a)

Notes Receivables:

The note receivables are a type of promissory note which is made for the payment of a specified amount at an extended date. These notes can be interest charging or cannot be charging the interest.

To calculate:

The journal entry for recording sales on January 1,2019.

Explanation

The Metzler Communications charges fees of $46,000 for a project from a local business and that business gives a note of 8%. This is given in the question.

The journal entry for recording sales for the Metzler Communications is as follows:

Date Particulars Debit ($) Credit ($)
Jan
To determine

(b)

Notes Receivables:

The note receivables are a type of promissory note which is made for the payment of a specified amount at an extended date. These notes can be interest charging or cannot be charging the interest.

To calculate:

The interest amount to be received on October 1,2019.

To determine

(c)

Notes Receivables:

The note receivables are a type of promissory note which is made for the payment of a specified amount at an extended date. These notes can be interest charging or cannot be charging the interest.

The necessary journal entry for recording the cash received on October 1,2019.

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