Concept explainers
Notes payable:
Notes Payable is a written promise to pay a certain amount on a future date, with certain percentage of interest. Companies use to issue notes payable to meet short-term financing needs.
To Record: the issuance of the notes payable by Corporation AT.
Notes payable:
Notes Payable is a written promise to pay a certain amount on a future date, with certain percentage of interest. Companies use to issue notes payable to meet short-term financing needs.
To Record: the appropriate adjustment for the note at December 31 by Corporation AT.
Notes payable:
Notes Payable is a written promise to pay a certain amount on a future date, with certain percentage of interest. Companies use to issue notes payable to meet short-term financing needs.
To Record: the payment of the note at maturity.
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FINANCIAL ACCOUNTING W/ACCESS >CI<
- Element Surfboards issued a $210,800 note on January 1, 2018 to a customer, Leona Marland, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 10.2% annual interest rate. Leona Marland does not pay on her account and dishonors the note. On December 2, 2018, Element Surfboards decides to sell the dishonored note to a collection agency for 30% of its value. Record the journal entries for Element Surfboards for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on October 1, 2018 C. Receivable sale on December 2, 2018arrow_forwardOn 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.arrow_forwardSpath 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.)arrow_forward
- Mystic Magic issued a $120,250 note on January 1, 2018 to a customer, Amy Arnold, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 9.6% annual interest rate. Amy Arnold does not pay on her account and dishonors the note. On November 10, 2018, Mystic Magic decides to sell the dishonored note to a collection agency for 25% of its value. Record the journal entries for Mystic Magic for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on October 1, 2018 C. Receivable sale on November 10, 2018arrow_forwardNon-Interest-Bearing Notes Payable On November 16, 2019, Clear Glass Company borrowed 20,000 from First American Bank by issuing a 90-day, non-interest-bearing note. The bank discounted this note at 12% and remitted the difference to Clear Glass. Required: 1. Prepare the journal entries of Clear Glass to record the preceding information, the related calendar year-end adjusting entry, and payment of the note at maturity. 2. Show how the preceding items Would be reported on the December 31, 2019, balance sheet. 3. Next Level What is Clear Glass Companys effective interest rate?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_forward
- Marmol Corporation uses the allowance method for bad debts. During 2019, Marmol charged 50,000 to bad debt expense and wrote off 45,200 of uncollectible accounts receivable. These transactions resulted in a decrease in working capital of: a. 0 b. 4,800 c. 45,200 d. 50,000arrow_forward35.On December 31, 2021, the Trust Finance Company had a P5,000,000 note receivable from Leila Company. The note bears 10% interest. The books reported accrued interest of P500,000 on this date. Because of financial distress being suffered by Leila Company, Trust Finance agreed to the restructuring and modification of the terms of its loan to Burgundy as follows: ·reduction of principal to P3,500,000; ·reduction of interest to 7% payable annually beginning Dec. 31, 2022; ·accrued interest on Dec. 31, 2021 is condoned; and ·principal payment was reset to Dec. 31, 2023. The prevailing market rate of interest for similar obligations on the date of restructuring decreased to 9%. Use present value factors rounded to two decimal places. How much impairment loss should Trust Finance Company record on December 31, 2021 as a result of the restructuring?arrow_forwardOn January 1, 2023, the city government provided Swerte Company a zero interest, P6,000,000 loan with a 4-year term. The prevailing market rate of interest for this type of loan is 8%. What is included in the entries on December 31, 2024? (PVF 3 decimals)A. Debit interest expense P352,800B. Credit income from grant P352,800C. Credit income from grant P381,024D. Credit interest expense P381,024arrow_forward
- On January 1, 2023, the city government provided Swerte Company a zero interest, P6,000,000 loan with a 4-year term. Theprevailing market rate of interest for this type of loan is 8%. What is included in the entries on December 31, 2024? (PVF 3 decimals)A. Debit interest expense P352,800B. Credit income from grant P352,800C. Credit income from grant P381,024D. Credit interest expense P381,024arrow_forwardEllsworth Enterprises borrowed $425,000 on an 8%, interest-bearing note on September 30, 2020. Ellsworth ends its fiscal year on December 31. The note was paid with interest on May 31, 2021. Prepare the entry for this note on September 30, 2020. Account Names DR CR Blank 1. Fill in the blank, read surrounding text. Blank 2. Fill in the blank, read surrounding text. Blank 3. Fill in the blank, read surrounding text. Blank 4. Fill in the blank, read surrounding text. Blank 5. Fill in the blank, read surrounding text. Blank 6. Fill in the blank, read surrounding text. Blank 7. Fill in the blank, read surrounding text. Blank 8. Fill in the blank, read surrounding text. Blank 9. Fill in the blank, read surrounding text. Blank 10. Fill in the blank, read surrounding text. Blank 11. Fill in the blank, read surrounding text. Blank 12. Fill in the blank, read surrounding text. Blank 13. Fill in the blank, read surrounding text. Blank 14. Fill in the blank, read…arrow_forwardOn October 1, 2011, Coast Financial loaned Barr Corporation$300,000, receiving in exchange a nine-month, 12 percentnote receivable. Coast ends its fiscal year on December 31and makes adjusting entries to accrue interest earned on allnotes receivable. The interest earned on the note receivablefrom Barr Corporation during 2012 will amount to:a. $9,000. b. $18,000.c. $27,000. d. $36,000.arrow_forward
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