Question

Garden Works Co. had a number of transactions involving receivables during the year 2017. Each of them follows.

Required

Prepare journal entries to record these independent transactions on the books of Garden Works Co. The Company's year-end is December 31.

a. On November 15, 2017, Garden Works Co. agreed to accept $500 in cash and a $2,000,90 day, 8% note from Agro Company to settle its $2,500 past-due account. Determine the maturity date and record the entry on November 15, on December 31, and on the date of maturity

b. Garden Works Co. held a $1,800, 6% 45 day note of Altamira Industries. At Maturity, December 15, Altamira dishonoured the note.

Record the dishonouring of the Note Receivable.

Answer 1

a.)	Maturity Date	February 13,2018 ( 15 + 31 + 31 + 13 )
	Date	Account Titles	Debit	Credit
	November 15, 2017	Cash	500.00
		8% Note Receivable-Agro Company	2,000.00
		Accounts Receivable -Agro Company		2,500.00
	December31 ,2017	Interest Receivable	20.44
		Interest Revenue		20.44
		(2,000 x 8% x 46)/360
	February 13,2018	Cash	2,040.00
		8% Note Receivable-Agro Company		2,000.00
		Interest Receivable		20.44
		Interest Revenue ( 2,000 x 8% x 44 )/360		19.56
b.)	Date	Account Titles	Debit	Credit
	December 15.	Accounts Receivable-Altamira Industries	1,813.50
		6% Note Receivable-Altamira Industries		1,800.00
		Interest revenue (1,800 x 6% x 45 ) / 360		13.50