Question

Flush Mate Co. wholesales bathroom fixtures. During the current fiscal year, Flush Mate Co. received the following notes:

	Date	Face Amount	Interest Rate	Term
1.	Mar. 6	$78,600	5%	45 days
2.	Apr. 23	25,600	8	60 days
3.	July 20	37,100	6	120 days
4.	Sept. 6	49,600	7	90 days
5.	Nov. 29	30,700	6	60 days
6.	Dec. 30	68,600	6	30 days

	Required:
1.	Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. Assume a 360-day year when calculating interest. (Note: Round each interest computation to the whole dollar.)
2.	Journalize the entry to record the dishonor of Note (3) on its due date. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.
3.	Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.
4.	Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.

Starting Question

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. Assume a 360-day year when calculating interest. (Note: Round each interest computation to the whole dollar.)

Note	Due Date	Interest Due at Maturity
1.		$
2.
3.
4.
5.
6.

Journal

2. Journalize the entry to record the dishonor of Note (3) on its due date. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3

3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8

Answer 1

1. (a&b)

Note	Due Date	Interest Due at maturity
1	April 20	$491 ($78,600×45/360×5%)
2	June 22	$341 ($25,600×60/360×8%)
3	Nov.17	$742($37,100×120/360×6%)
4	Dec.5	$868 ($49,600×90/360×7%)
5	Jan 28	$307 ($30,700×60/360×6%)
6	Jan 29	$343 ($68,600×30/360×6%)

2

Date	Accounts Title and Explanation	Debit	Credit
Nov.17	Accounts Receivable	$37,842
	Note Receivable		$37,100
	Interest Revenue		$742

3.

Date	Account Title and Explanation	Debit	Credit
Dec.31	Interest Receivable	$175
	Interest Revenue		$175

Explanation ;

Accrued Interest

$30,700×6%×32/360 = 164

$68,600×6%×1/360= 11

$164 + $11 = $175

4.   

Date	Account Title and Explanation	Debit	Credit
Jan 28	Cash	$31,007
	Note Receivable		$30,700
	Interest Receivable		$164
	Interest Revenue		$143
	($30,700×6%×28/360)
Jan 29	Cash	$68,943
	Note Receivable		$68,600
	Interest Receivable		$11
	Interest Revenue		$332
	($68,600×6%×29/360)