Question

In: Accounting

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

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 $75,300 5% 45 days
2. Apr. 23 24,500 9% 60 days
3. July 20 41,600 5% 120 days
4. Sept. 6 55,400 6% 90 days
5. Nov. 29 24,100 7% 60 days
6. Dec. 30 67,400 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.

Solutions

Expert Solution

1. Computation of the Due date of each note and interest due on maturity
S. No Date Face Amount Term Interest Due Date Interest on Maturity
1 06-Mar $75,300.00 45 5.00% 20-Apr $470.63
2 23-Apr $24,500.00 60 9.00% 22-Jun $367.50
3 20-Jul $41,600.00 120 5.00% 17-Nov $693.33
4 06-Sep $55,400.00 90 6.00% 05-Dec $831.00
5 29-Nov $24,100.00 60 7.00% 28-Jan $281.17
6 30-Dec $67,400.00 30 6.00% 29-Jan $337.00
S. No. Date Account Title Debit Credit
2 17-Nov Account Receivable $42,293.33
Note Receivable $41,600.00
Interets Receivable $693.33
(To Record note(3) receivable dishonored, interest income recognized)
3 31-Dec Interets Receivable $161.19
Interest Income $161.19
( To Record Interest accrued on note 5 & 6 for 32 and 1 day respectively).
4(a) 28-Jan Cash $24,381.17
Note Receivable (5) $24,100.00
Interest Revenue $131.21
Interets Receivable $149.96
( To Record Amount Received for Note5 )
4(b) 29-Jan Cash $67,737.00
Note Receivable (6) $67,400.00
Interest Revenue $325.77
Interets Receivable $11.23
( To Record Amount Received for Note6 )

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