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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 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

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 ($) Credit ($)
March 8 Notes receivable 33,000  
      Accounts receivable   33,000
  (To record the receipt of note on account)    
 
March 31 Notes receivable 80,000  
      Accounts receivable   80,000
  (To record the receipt of note on account)    
 
May 7 Cash 33,275  
      Notes receivable   33,000
      Interest revenue ($33,275$33,000)   275
  (To record collection of cash on note of March 8)    
 
May 16 Notes receivable 72,000  
      Accounts receivable   72,000
  (To record the receipt of note on account)    
 
June 11 Notes receivable 36,000  
    Accounts receivable   36,000
  (To record the receipt of note on account)    
 
June 29 Cash $81,400  
      Notes receivable   $80,000
      Interest revenue ($

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