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The following data relate to notes receivable and interest for Owens Co., a financial services company. (All notes are dated as of the day they are received.) Mar. 8. Received a $33,000, 5%, 60-day note on account. 31. Received an $80,000, 7%, 90-day note on account. May 7. Received $33,275 on note of March 8. 16. Received a $72,000, 7%, 90-day note on account. June 11. Received a $36,000, 6%, 45-day note on account. 29. Received $81,400 on note of March 31. July 26. Received $36,270 on note of June 11. Aug. 4. Received a $48,000, 9%, 120-day note on account. 14. Received $73,260 on note of May 16. Dec. 2. Received $49,440 on note of August 4. Instructions Journalize the entries to record the transactions.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 9, Problem 5PB
Textbook Problem
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The following data relate to notes receivable and interest for Owens Co., a financial services company. (All notes are dated as of the day they are received.)

Mar. 8. Received a $33,000, 5%, 60-day note on account.
31. Received an $80,000, 7%, 90-day note on account.
May 7. Received $33,275 on note of March 8.
16. Received a $72,000, 7%, 90-day note on account.
June 11. Received a $36,000, 6%, 45-day note on account.
29. Received $81,400 on note of March 31.
July 26. Received $36,270 on note of June 11.
Aug. 4. Received a $48,000, 9%, 120-day note on account.
14. Received $73,260 on note of May 16.
Dec. 2. Received $49,440 on note of August 4.

Instructions

Journalize the entries to record the transactions.

To determine

Journalize the entries to record the transactions.

Explanation of Solution

Note receivable: Note receivable refers to a written promise received by the creditor from the debtor in formal, for the amounts to be settled 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. Notes receivable often used for the credit periods of more than 60 days.

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.

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.

Journalize the entries to record the transactions.

DateAccount Title and ExplanationDebit ($)Credit ($)
March 8Notes receivable33,000 
 Accounts receivable 33,000
 (To record the receipt of note on account)  
 
March 31Notes receivable80,000 
     Accounts receivable 80,000
 (To record the receipt of note on account)  
 
May 7Cash33,275 
     Notes receivable 33,000
     Interest revenue ($33,275$33,000) 275
 (To record collection of cash on note of March8)  
 
May 16Notes receivable72,000 
     Accounts receivable 72,000
 (To record the receipt of note on account)  
 
June 11Notes receivable36,000 
    Accounts receivable 36,000
 (To record the receipt of note on account)  
 

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Chapter 9 Solutions

Financial Accounting
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