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(1)
Accounts receivable:
Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.
Note receivable:
Note receivable refers to a written promise by the debtor 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.
To prepare: The
(2)
To prepare: The journal entry in the books of Corporation K to record the accrued interest revenue.
(3)
To prepare: The journal entry in the books of Corporation K to record the collection of principal and interest at maturity.
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Chapter 8 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
- A company collects an honored note with a maturity date of 24 months from establishment, a 10% interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of the honored note at maturity date? A. Interest Revenue, Interest Expense, Cash B. Interest Receivable, Cash, Notes Receivable C. Interest Revenue, Interest Receivable, Cash, Notes Receivable D. Notes Receivable, Interest Revenue, Cash, Interest Expensearrow_forwardNotes Receivable Transactions The following notes receivable transactions occurred for Harris Company during the last three months of the current year. (Assume all notes are dated the day the transaction occurred.) Required: 1. Prepare the journal entries to record the preceding note transactions and the necessary adjusting entries on December 31. (Assume that Harris does not normally sell its notes and uses a 360-day year for the purpose of computing interest. Round all calculations to the nearest penny.) 2. Show how Harris notes receivable would be disclosed on the December 31 balance sheet. (Assume these are the only note transactions encountered by Harris during the year.)arrow_forwardOn June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank. The note has a face value of 15,000 and a maturity value (principal plus interest) of 15,400. The discount is calculated to be 385, and the accrued interest income is 100. The recourse liability is estimated to be 1,000. Prepare the journal entry of Phillips to record the sale of the note receivable.arrow_forward
- Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9, from a customer on account.a. Determine the due date of the note.b. Determine the maturity value of the note.c. Journalize the entry to record the receipt of the payment of the note at maturity.arrow_forwardBelow are the transactions related to notes receivable activity for Barton Corporation. Β Β Β Β Β Β Β Β Β Β Record each transaction in the journal provided. Enter the date of the last transaction. Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β 2020 Β Β Β Β Β Β Β Β Β Β 13-Nov Accepted a $40,000, 90-day, 6% note from a customer in exchange for their past Β Β Β Β Β Β Β Β Β Β due accounts receivable balance Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β 31-Dec Made an entry to accrue the accrued interest earned on the Nov 13 note Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β 2021 Β Β Β Β Β Β Β Β Β Β 11-Feb Received payment for the principal and interest on the note dated November 13 Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β 22-Apr Accepted a $20,000, 45-day, 5% note from a customer in exchange for consulting fees Β Β Β Β Β Β Β Β Β Β provided Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β ??? Received payment for the principal and interest on the note dated April 22β¦arrow_forwardA company collects an honored note with a maturity date of 24 months from establishment, a 10%interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of thehonored note at maturity date?A. Interest Revenue, Interest Expense, CashB. Interest Receivable, Cash, Notes ReceivableC. Interest Revenue, Interest Receivable, Cash, Notes ReceivableD. Notes Receivable, Interest Revenue, Cash, Interest Expensearrow_forward
- A business issued a 120-day, 6% note for $10,000 to a creditor on account. The company uses a 360-day year for interest calculations. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Β β Description Debit Credit Β (a) Β Β Β Β Β Β Β Β Β Β Β Β (b)arrow_forwardLundquist Company received a 60-day, 6% note for $37,500, dated July 23, from a customer on account. Required: a. Determine the due date of the note. b. Determine the maturity value of the note. Assume 360 days in a year. c. Journalize the entry to record the receipt of the payment of the note at maturity. Refer to the Chart of Accounts for exact wording of account titles. Β ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 129 Allowance for Doubtful Accounts 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment Β LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable Β EQUITY 310 Owner, Capital 311 Owner, Drawing 312 Income Summary Β REVENUE 410β¦arrow_forward
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