Journalize the following transactions of Trapper Jon’s Productions: June 23. Received a $48,000, 90-day, 8% note dated June 23 from Radon Express Co. on account. Sept. 21. The note is dishonored by Radon Express Co. Oct. 21. Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Radon Express Co. on September 21.

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Financial Accounting

15th Edition

Carl Warren + 2 others

Publisher: Cengage Learning

ISBN: 9781337272124

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BuyFind

Financial Accounting

15th Edition

Carl Warren + 2 others

Publisher: Cengage Learning

ISBN: 9781337272124

Solutions

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Answer 3

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Answer 4

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Answer 5

To determine

Journalize the entries, to record the transactions.

Explanation of Solution

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 lender or creditor. Notes receivable is an asset of a business.

Interest on note: Interest on note is the amount charged on the principal value of note for the privilege of borrowing money. Interest is to be paid by the borrower and to be received by the lender.

Dishonored note: Note receivable refers to a written promise by the debtor for the amounts to be received within a stipulated period of time. Note is otherwise known as promissory note. If this promissory note is not settled by the debtor at its maturity date, then it became is known as dishonored note.

Journalize the entries to record the transactions.

Date	Account Title and Explanation	Debit ($)	Credit ($)
June 23	Notes receivable	48,000
June 23	Accounts receivable – Company RE		48,000
	(To record the receipt of note on account)

December 31	Accounts receivable – Company RE	48,960
	Notes receivable		48,000
	Interest revenue (1)		960
	(To record note dishonored)

October 21	Cash	49,368
October 21	Accounts receivable		48,960
	Interest revenue (2)		408
	(To record the collection of cash on account along with 10% interest)

Table (1)

Working note (1):

Calculate the amount of interest revenue accrued till September 21.

Interest revenue accruedtill September 21} = [Notes Receivable×Interest rate×Time in terms of one year]= $48,000×8%×90 days360 days=$960

Working note (2):

Calculate the amount of interest revenue earned for the period from September 22 to October 21

Financial Accounting

Solutions

Financial Accounting

Explanation of Solution

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Chapter 9 Solutions

Additional Business Textbook Solutions

June 23.	Received a $48,000, 90-day, 8% note dated June 23 from Radon Express Co. on account.
Sept. 21.	The note is dishonored by Radon Express Co.
Oct. 21.	Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Radon Express Co. on September 21.