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	$82,000	6%	45 days
2.	Apr. 23	28,900	10	60 days
3.	July 20	41,400	7	120 days
4.	Sept. 6	49,700	7	90 days
5.	Nov. 29	26,300	5	60 days
6.	Dec. 30	72,000	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. Round each interest computation to the whole dollar.
	2. Journalize the entry to record the dishonor of Note (3) on its due date.*
	3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31.*
	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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Assume a 360-day year when calculating interest. Round your answers to the nearest whole dollar.

Chart of Accounts

CHART OF ACCOUNTS
Flush Mate Co.
General Ledger
ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 129 Allowance for Doubtful Accounts 131 Interest Receivable 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Owner, Capital 311 Owner, Drawing	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Sales Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Store Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 530 Office Salaries Expense 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense

First 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. 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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Assume a 360-day year when calculating interest. Round your answers 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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Assume a 360-day year when calculating interest. Round your answers 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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Assume a 360-day year when calculating interest. Round your answers to the nearest whole dollar.

Answer 1

		(a)		(b)
		Due date		maturity value
1		20-Apr		615
2		22-Jun		482
3		17-Nov		966
4		4-Dec		870
5		30-Jan		219
6		29-Jan		360
2)	Date	Account titles & Explanations				Debit	Credit
	17-Nov	Accounts receivable				42,366
		interest receivable					966
		notes receivable					41,400
3)	Date	Account titles & Explanations				Debit	Credit
	31-Dec	interest receivable				110
		interest income					110
		(26300*5%*30/360)
	31-Dec	interest receivable				12
		interest income					12
		(72000*6%*1/360)
		(you can combine both entries if compound entry required)
4)	Date	Account titles & Explanations				Debit	Credit
	30-Jan	Cash				26,519
		notes receivable					26,300
		interest receivable					110
		interest income					109
	29-Jan	Cash				72,360
		notes receivable					72,000
		interest receivable					12
		interest income					348