Question

Details of Notes Receivable and Related Entries

Gen-X Ads Co. produces advertising videos. During the current year ending December 31, Gen-X Ads received the following notes:

	Date	Face Amount		Term		Interest Rate
1.	Apr. 10	$75,000		60	days	4	%
2.	June 24	16,800		30	days	6
3.	July 1	72,000		120	days	6
4.	Oct. 31	72,000		60	days	9
5.	Nov. 15	54,000		60	days	6
6.	Dec. 27	180,000		30	days	4

Required:

Assume 360 days in a year.

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.

Note	(a) Due Date	(b) Interest Due at Maturity
(1)		$
(2)
(3)
(4)
(5)
(6)

2. Journalize the entry to record the dishonor of Note (3) on its due date. If an amount box does not require an entry, leave it blank or enter "0".

3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31.

Dec. 31

4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. If an amount box does not require an entry, leave it blank or enter "0".

Note 5
Note 6

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Answer 1

1)
	Due		interest due at maturity
	date
1	9-Jun		500
2	24-Jul		84
3	29-Oct		1440
4	30-Dec		1080
5	14-Jan		540
6	26-Jan		600
2)	Date	Account titles & explanations				Debit	Credit
	29-Oct	account receivable				73,440
		interest income					1,440
		note receivable					72,000
	31-Dec	interest receivable				494
		interes income					494
		(note 5    = 54,000*6%*46/360)
		note 6     = 180,000*4%*4/360)
	14-Jan	cash				54,540
		note receivable					54,000
		interest receivable					414
		interest income					126
	26-Jan	cash				180,600
		note receivable					180,000
		interest receivable					80
		interest income					520