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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Notes receivable entries

The following data relate to notes receivable and interest for CGH Cable Co., a cable manufacturer and supplier. (All notes are dated as of the day they are received.)

Apr. 10. Received a $144,000, 5%, 60-day note on account.
May 15. Received a $270,000, 7%, 120-day note on account.
June 9. Received $145,200 on note of April 10.
Aug. 22. Received a $150,000, 4%, 45-day note on account.
Sept.12. Received $276,300 on note of May 15.
30. Received a $210,000, 8%, 60-day note on account.
Oct. 6. Received $150,750 on note of August 22.
18. Received a 120,000, 5%, 60-day note on account.
Nov. 29. Received $212,800 on note of September 30.
Dec. 17. Received $121,000 on note of October 18.

Instructions

Journalize the entries to record the transactions.

To determine

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.

To journalize: The entries to record the transactions.

Explanation

Journalize the entries to record the transactions.

Date Account Title and Explanation Debit ($) Credit ($)
April 10 Notes receivable 144,000  
      Accounts receivable   144,000
  (To record the receipt of note on account)    
 
May 15 Notes receivable 270,000  
      Accounts receivable   270,000
  (To record the receipt of note on account)    
 
June 9 Cash 145,200  
      Notes receivable   144,000
      Interest revenue ($145,200$144,000)   1,200
  (To record collection of cash on note of April 10)    
 
August 22 Notes receivable 150,000  
      Accounts receivable   150,000
  (To record the receipt of note on account)    
 
September 12 Cash 276,200  
    Notes receivable   270,000
      Interest revenue ($276,200$270,000)       6,300
  (To record collection of cash on note of May 15)    
       
September 30 Notes receivable 210,000  
    Accounts receivable   210,000
  (To record the receipt of note on account)     <

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