Question

Details of Notes Receivable and Related Entries

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

	Date	Face Amount		Interest Rate		Term
1.	Apr. 10	$69,000		4	%	60	days
2.	June 24	14,400		6		30	days
3.	July 1	72,000		6		120	days
4.	Oct. 31	72,000		5		60	days
5.	Nov. 15	54,000		6		60	days
6.	Dec. 27	144,000		4		30	days

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.

Due Date	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".

Jan. 14
Jan. 26

Answer 1

1.

S.NO.	AMOUNT OF INTEREST DUE AT MATURITY ($)	DUE DATE
1.	460	9 JUNE
2.	72	26 JULY
3.	1440	29 OCTOBER
4.	300	30 DECEMBER
5.	540	14 JAN.
6.	480	26 JAN.

2. JOURNAL ENTRY

PARTICULARS	DEBIT $	CREDIT $
29. OCT. DRAWEE A/C DR.                      TO BILLS RECEIVABLE              ( BILL DISHONOURED ON DUE DATE )

3. JOURMAL ENTRY ON 31 DECEMBER,

PARTICULARS	DEBIT $	CREDIT $
NOTE-5. INTEREST ON NOT A/C DR.                    TO ACCURED INTEREST A/C ( INTEREST ACCURED)	414	414
NOTE-6 INTEREST ON NOT A/C DR.                    TO ACCURED INTEREST A/C (INTEREST ACCURED)	48	48

4. JOURNAL ENTRY

PARTICULARS	DEBIT $	CREDIT $
JAN. 14 BANK A/C DR.                     TO INTEREST A/C (INTEREST RECEIVED ON NOTE-5.)	540	540
JAN. 26    BANK A/C DR.       TO INTEREST A/C (INTEREST RECEIVED ON NOTE-6.)	480	480