Question

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	$75,000		4	%	60	days
2.	June 24	18,000		6		30	days
3.	July 1	45,000		6		120	days
4.	Oct. 31	45,000		5		60	days
5.	Nov. 15	90,000		6		60	days
6.	Dec. 27	180,000		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

Solution 1:

Note	Due Date	Interest due at maturity
		Working	Amount
1	09-Jun	75000*4%*60/360	$500.00
2	24-Jul	18000*6%*30/360	$90.00
3	29-Oct	45000*6%*120/360	$900.00
4	30-Dec	45000*5%*60/360	$375.00
5	14-Jan	90000*6%*60/360	$900.00
6	26-Jan	180000*4%*30/360	$600.00

Solution 2:

Journal Enteries - Gen-X Ads Co.
Date	General Journal	Debit	Credit
29-Oct	Account Receivable Dr.	$45,900.00
	To Interest revenue		$900.00
	To Note Receivable		$45,000.00
	(Being dishonour of note (3) on its due date)

Solution 3:

Journal Enteries - Gen-X Ads Co.
Date	General Journal	Debit	Credit
31-Dec	Interest Receivables Dr [(90000* 6%*46/360) + (180,000*4%*4/360)]	$770.00
	To Interest Revenue		$770.00
	(Being interest accrued on note (5) and (6))

Solution 4:

Journal Enteries - Gen-X Ads Co.
Date	General Journal	Debit	Credit
14-Jan	Cash Dr	$90,900.00
	To Notes Receivables		$90,000.00
	To Interest Receivables (90000* 6%*46/360)		$690.00
	To Interest Revenue (90000* 6%*14/360)		$210.00
	(Being amount received due on note (5) in january)
26-Jan	Cash Dr	$1,80,600.00
	To Notes Receivables		$1,80,000.00
	To Interest Receivables (180,000*4%*4/360)		$80.00
	To Interest Revenue (180,000*4%*26/360)		$520.00
	(Being amount received due on note (6) in january)