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

Answer 1

1. Due Date and Amount of Interest Due
Note	Due Date	Face Amount	Rate of Interest	Days	Interest Amount
1	Jun-09	$75,000	4%	60	$500
2	Jul-24	$16,800	6%	30	$84
3	Oct-29	$72,000	6%	120	$1,440
4	Dec-30	$72,000	9%	60	$1,080
5	Jan-14	$54,000	6%	60	$540
6	Jan-26	$180,000	4%	30	$600

2.Journal Entry For Note-3
Date	Accoutn Tittle & Explanation	Debit	Credit
Oct-29	Account Receivable	$73,440
	Interest Revenue		$1,440
	Note Receivable		$72,000

3.Journal Entry For Note-5 & 6
Date	Accoutn Tittle & Explanation	Debit	Credit
Dec-31	Interest Receivable	$494
	Interest Revenue ($414+80)		$494
	Accrued Interest
	($54000*6%*46/360)=414
	($180000*4%*4/360)=80

4.Journal Entry For Note-5,6
Date	Accoutn Tittle & Explanation	Debit	Credit
Jan-14	Cash	$54,540
	Interest Receivable		$414
	Interest Revenue		$126
	Note Receivable- Note5		$54,000
Jan-26	Cash	$180,600
	Interest Receivable		$80
	Interest Revenue		$520
	Note Receivable- Note6		$180,000