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  • Problem 9-1,9-2,9-3

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    Annabeth Chase
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    The document contains information about several notes receivable transactions, including: 1) On January 1, a $500,000 note receivable was issued with interest of 12% per year. On March 1, the note was discounted for $503,500, resulting in a $6,500 loss. 2) On March 14, a $2,050,000 accounts receivable was recorded along with a $50,000 freight charge allowance. On April 7, the receivable was converted to a $2,000,000 note. On April 20, the note was discounted for $2,001,750, resulting in an $8,250 loss. 3) Several other note receivable transactions

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    The document contains information about several notes receivable transactions, including: 1) On January 1, a $500,000 note receivable was issued with interest of 12% per year. On March 1, the note was discounted for $503,500, resulting in a $6,500 loss. 2) On March 14, a $2,050,000 accounts receivable was recorded along with a $50,000 freight charge allowance. On April 7, the receivable was converted to a $2,000,000 note. On April 20, the note was discounted for $2,001,750, resulting in an $8,250 loss. 3) Several other note receivable transactions

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    20 views3 pages

    Problem 9-1,9-2,9-3

    Uploaded by

    Annabeth Chase
    The document contains information about several notes receivable transactions, including: 1) On January 1, a $500,000 note receivable was issued with interest of 12% per year. On March 1, the note was discounted for $503,500, resulting in a $6,500 loss. 2) On March 14, a $2,050,000 accounts receivable was recorded along with a $50,000 freight charge allowance. On April 7, the receivable was converted to a $2,000,000 note. On April 20, the note was discounted for $2,001,750, resulting in an $8,250 loss. 3) Several other note receivable transactions

    Copyright:

    © All Rights Reserved
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    of 3

    Problem 9-1

    Jan. 1 Notes receivable 500,000


    Sales 500,000

    March 1 Cash 503,500


    Loss on Note Receivable discounting 6,500
    Note receivable 500,000
    Interest Income 10,000

    Computation: Principal 500,000


    Interest (500,000×12%×6/12) 30,000
    Maturity Value 530,000

    Discount (530,000×15%×4/12) 26,500


    Net Proceeds 503,500

    Principal 500,000
    Accrued Interest receivable
    (500,000×12%×2/12) 10,000
    Carrying Amount of NR 510,000

    Net Proceeds 503,500


    Carrying Amount of NR 510,000
    Loss on Discounting (6,500)

    July 1 NO ENTRY

    Problem 9-2

    March 14 Accounts Receivable 2,050,000


    Freight out 50,000
    Sales 2,050,000
    Allowance for Freight Charge 50,000

    April 7 Notes receivable 2,000,000


    Allowance for Freight Charge 50,000
    Accounts Receivable 2,050,000

    April 20 Cash 2,001,750


    Loss on Note Receivable discounting 8,250
    Note receivable discounted 2,000,000
    Interest Income 10,000

    Computation: Principal 2,000,000


    Interest (2,000,000×12%×60/360) 40,000
    Maturity Value 2,040,000

    Discount (2,040,000×15%×45/360) 38,250


    Net Proceeds 2,001,750

    Principal 2,000,000
    Accrued Interest receivable
    (2,000,000×12%×15/360) 10,000
    Carrying Amount of NR 2,010,000

    Net Proceeds 2,001,750


    Carrying Amount of NR 2,010,000
    Loss on Discounting (8,250)

    June 4 Accounts Receivable 2,050,000


    Cash 2,050,000

    Notes receivable discounted 2,000,000


    Notes receivable 2,000,000

    July 4 Cash 2,070,000


    Accounts receivable 2,050,000
    Interest income 20,000
    (2,000,000×12%×1/12)

    Problem 9-3

    April 5 Notes Receivable 510,000


    Accounts receivable 500,000

    19 Cash 501,075
    Loss on Note Receivable discounting 1,425
    Note receivable discounted 500,000
    Interest Income 2,500

    Computation: Principal 500,000


    Interest (500,000×12%×60/360) 10,000
    Maturity Value 510,000

    Discount (510,000×14%×45/360) 8,925


    Net Proceeds 501,075

    Principal 500,000
    Accrued Interest receivable
    (500,000×12%×15/360) 2,500
    Carrying Amount of NR 502,500

    Net Proceeds 501,075


    Carrying Amount of NR 502,500
    Loss on Discounting (1,425)

    May 3 Notes Receivable 1,000,000


    Accounts Receivable 1,000,000

    16 Cash 995,000
    Loss on Note Receivable discounting 5,000
    Note receivable discounted 1,000,000

    Principal 1,000,000
    Discount (1,000,000×12%15/360) 5,000
    Net Proceeds 995,000

    Carrying Amount of NR 1,000,000


    Loss on Discounting 5,000

    25 Notes Receivable 1,500,000


    Interest Income 4,500
    Note receivable discounted 1,504,500

    Computation: Principal 1,500,000


    Interest (1,500,000×12%×60/360) 30,000
    Maturity Value 1,530,000

    Discount (1,530,000×12%×50/360) 25,500


    Net Proceeds 1,504,500

    June 7 Accounts Receivable 530,000


    Cash 530,000

    Notes Receivable discounted 500,000


    Notes receivable 500,000

    15 Notes Receivable 800,000


    Sales 800,000
    16,000

    18 Cash 532,650
    Accounts Receivable 530,000
    Interest Income (530,000×12%×15/360) 2,650

    B. Prepare necessary adjustments on June 30

    Accrued interest receivable 4,000


    Interest Income (800,000×12%×15/360) 4,000

    Notes receivable discounted 1,000,000


    Notes receivable 1,000,000

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