Concept explainers
(a)
Note Receivable:
Note Receivable is a written document, which can be used for receipt of money in the future in lieu of cash payment in the present time.
The
(b)
Note Receivable:
Note Receivable is a written document, which can be used for receipt of money in the future in lieu of cash payment in the present time.
The amount of interest that kelsey will receive on December
(c)
Note Receivable:
Note Receivable is a written document, which can be used for receipt of money in the future in lieu of cash payment in the present time.
The journal entry for recording the cash received to pay off the note and interest on December
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Chapter 5 Solutions
Cornerstones of Financial Accounting
- 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 Metzlers journal entry to record the cash received to pay off the note and interest on October 1, 2019.arrow_forwardNotes Receivable Link Communications programs voicemail systems for businesses. For a recent project, they charged $135 000. The customer secured this amount by signing a note bearing 9% interest on February 1, 2019. Required: 1. Prepare the journal entry to record the sale on February 1, 2019. 2. Determine how much interest Link will receive if the note is repaid on December 1, 2019. 3. Prepare Links journal entry to record the cash received to pay off the note and interest on December 1, 2019.arrow_forwardUnearned Revenue Jennifers Landscaping Services signed a $400-per-month contract on November 1, 2019, to provide plant watering services for Lola Inc.s office buildings. Jennifers received 4 months' service fees in advance on signing the contract. Required: 1. Prepare Jennifers journal entry to record the cash receipt for the first 4 months. 2. Prepare Jennifers adjusting entry at December 31, 2019. 3. CONCEPTUAL CONNECTION How would the advance payment (account(s) and amounts(s)] be reported in Jennifers December 31, 2019, balance sheet? How would the advance payment [account(s) and amount(s)] be reported in Lolas December 31, 2019, balance sheet?arrow_forward
- Reversing Entries Thomas Company entered into two transactions involving promissory notes and properly recorded each transaction. 1. On November 1, it purchased land at a cost of 8,000. It made a 2,000 down payment and signed a note payable agreeing to pay the 6,000 balance in 6 months plus interest at an annual rate of 10%. 2. On December 1, it accepted a 4,200, 3-month, 12% (annual interest rate) note receivable from a customer for the sale of merchandise. On December 31, Thomas made the following related adjustments: Required: 1. Assuming that Thomas uses reversing entries, prepare journal entries to record: a. the January 1, reversing entries b. the March 1, 4,326 collection of the note receivable c. the May 1, 6,300 payment of the note payable 2. Assuming instead that Thomas does not use reversing entries, prepare journal entries to record the collection of the note receivable and the payment of the note payable.arrow_forwardNotes Receivable On September 1, 2016, Dougherty Corp. accepted a six-month, 7%, $45,000 interest-bearing note from Rozelle Company in payment of an account receivable. Doughertys year-end is December 31. Rozelle paid the note and interest on the due date. Required Who is the maker and who is the payee of the note? What is the maturity date of the note? Prepare all necessary journal entries that Dougherty needs to make in connection with this note.arrow_forwardService Revenue Softball Magazine Company received advance payments of $75,000 from customers during 2019. At December 31, 2019, $20,000 of the advance payments still had not been earned. Required: After the adjustments are recorded and posted at December 31, 2019, calculate what the balances will be in the Unearned Magazine Revenue and Magazine Revenue accounts. Use the following information for Cornerstone Exercises 5-23 and 5-24: Bolton sold a customer service contract with a price of S37 000 to Sammys Wholesale Company. Bolton offered terms of 1/10, n/30 and expects Sammy to pay within the discount period.arrow_forward
- Accounting for Notes Receivable Yarnell Electronics sells computer systems to small businesses. Yarnell engaged in the following activities involving notes receivable: a. On September 1, 2019, Yarnell sold a $10,000 system to Ross Company. Ross gave Yarnell a 6-month, 7% note as payment. b. On December 1, 2019, Yarnell sold a $6,000 system to Searfoss Inc. Searfoss gave Yarnell a 9-month, 9% note as payment. c. On March 1, 2020, Ross paid the amount due on its note. d. On September 1, 2020, Searfoss paid the amount due on its note. Required: Prepare the necessary journal and adjusting entries for Yarnell Electronics to record these transactions.arrow_forwardRent Receivable Hudson Corp. has extra space in its warehouse and agrees to rent it out to Stillwater Company at the rate of $2,000 per month. The space was made available to Stillwater beginning on September 1. Under the terms of the agreement, Stillwater pays the months rent on the fifth day after the end of the month. Assume that Hudson prepares adjusting entries at the end of each month. Required How much revenue should Hudson record in September? How much revenue should Hudson record in October? Prepare the necessary entries on Hudsons books during the month of October.arrow_forwardCollection of Amounts Previously Written Off Hannah purchased a laptop computer from Perry Corp. for $1,500. Hannahs receivable has been outstanding for over 180 days, and Perry determines that the total amount is uncollectible and writes off all of Hannahs debt. Hannah later receives a windfall and pays the amount of her balance to Perry Corp. Required: Make the appropriate journal entries (if any) to record the receipt of $450 by Perry Corp.arrow_forward
- Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions, and prepare any necessary journal entries for each situation. A. March 31: Emperor provides cleaning services for fifteen pools during the month of March at a sales price per pool of $550 cash. Emperor records warranty estimates when sales are recognized and bases warranty estimates on 2% of sales. B. April 5: A customer files a warranty claim that Emperor honors in the amount of $100 cash. C. April 13: Another customer, J. Jones, files a warranty claim that Emperor does not honor due to customer negligence. D. June 8: J. Jones files a lawsuit requesting damages related to the dishonored warranty in the amount of $1,500. Emperor determines that the lawsuit is likely to end in the plaintiffs favor and the $1,500 is a reasonable estimate for damages.arrow_forwardAccounts Payable On May 18, Stanton Electronics purchased, on credit, 1,000 TV sets for $400 each. Stanton plans to resell these TVs in its store. Stanton paid the supplier on June 30. Required: Prepare the necessary journal entry (or entries) on May 18 and June 30.arrow_forwardAccounts Payable Sleek Ride, a company providing limo services, has a December 31 year-end date. For Sleek Ride, the following transactions occurred during the first 10 days of June: a. Purchased, on credit, space for classified advertisements in the New York Times for $1,950. The advertising was run the day the space was purchased. b. Purchased office supplies from Office Max on credit in the amount of $475. c. One of Sleek Rides sales staff signed a $20,000 contract to provide exclusive limo services for a large company for the remainder of the month. The salespersons commission is 10% of service revenue. The commission will be paid July 10. ( Note: Concern yourself only with the commission.) d. Received electric bill for May. The bill is $4,200 and is due June 15. e. Received a bill for $970 from Harrys Auto. Harrys repaired 10 limos for Sleek Ride in late May. Payment is due June 18. Required: Prepare journal entries for the above transactions.arrow_forward
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