/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q9SE Question: A table of notes recei... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 8: Q9SE (page 468)

Question: A table of notes receivable for 2018 follows:

Principal

Interest

Interest Period During 2018

Note 1

\( 30,000

6%

6 months

Note 2

\) 12,000

10%

270 days

Note 3

\( 14,000

14%

75 days

Note 4

\) 100,000

7%

10 months

For each of the notes receivable, compute the amount of interest revenue earned during 2018. Round to the nearest dollar

Short Answer

Expert verified

Answer:

The amount of interest earned:

Note 1- $900

Note 2- $888

Note 3- $403

Note 4- $5,833

Step by step solution

01

Definition of note receivable

The notes receivable means the note that is received by the company. The notes receivable are issued by the debtor of the company and the debtor pays interest to the company on the notes.

02

Step 2: Interest Calculation for Notes Receivable

Interest鈥�鈥�Note鈥�1=Principal脳Rate脳Time鈥�鈥�Period=$30,000脳6%脳6Interest鈥�鈥�Note鈥�2=Principal脳Rate脳Time鈥�鈥�Period=$12,000脳10%脳270365=$88812=$900Interest鈥�鈥�Note鈥�2=Principal脳Rate脳Time鈥�鈥�Period=$12,000脳10%脳270365=$888Interest鈥�鈥�Note鈥�3=Principal脳Rate脳Time鈥�鈥�Period=$14,000脳14%脳75365=$403Interest鈥�鈥�Note鈥�4=Principal脳Rate脳Time鈥�鈥�Period=$100,000脳7%脳1012=$5,833

03

Total interest calculation for year 2018

Principal

Interest

Period

Interest

Note 1

$ 30,000

6%

6 Months

$900

Note 2

$ 30,000

10%

270 days

$888

Note 3

$ 14,000

14%

75 days

$403

Note 4

$ 100,000

7%

10 Months

$5,833

The amount of Interest revenue earned during 2018 is $ 8024.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Evaluating ratio data

Silver Clothiers reported the following selected items at April 30, 2018 (last year鈥檚鈥�2017鈥攁mounts also given as needed):

Requirements

1. Calculate Abanaki鈥檚 acid-test ratio for 2018. (Round to two decimals.) Determine whether Abanaki鈥檚 acid-test ratio improved or deteriorated from 2017 to 2018. How does Abanaki鈥檚 acid-test ratio compare with the industry average of 0.80?

2. Calculate Abanaki鈥檚 accounts receivable turnover ratio. (Round to two decimals.) How does Abanaki鈥檚 ratio compare to the industry average accounts receivable turnover of 10?

3. Calculate the days鈥� sales in receivables for 2018. (Round to the nearest day.) How do the results compare with Abanaki鈥檚 credit terms of net 30?

Question:

Journalizing note receivable transactions including a dishonored note

On September 30, 2018, Team Bank loaned $94,000 to Kendall Warner on a one-year, 6% note. Team鈥檚 fiscal year ends on December 31.

Requirements

1. Journalize all entries for Team Bank related to the note for 2018 and 2019.

2. Which party has a

a. note receivable?

b. note payable?

c. interest revenue?

d. interest expense?

3. Suppose that Kendall Warner defaulted on the note. What entry would the Team record for the dishonored note?

Applying the direct write-off method to account for uncollectibles

Shawna Valley is an attorney in Los Angeles. Valley uses the direct write-off method to account for uncollectible receivables.

At April 30, 2018, Valley鈥檚 accounts receivable totaled \(19,000. During May, she earned revenue of \)22,000 on account and collected \(15,000 on account. She also wrote off uncollectible receivables of \)1,100 on May 31, 2018.

Requirements

1. Use the direct write-off method to journalize Valley鈥檚 write-off of the uncollectible receivables.

2. What is Valley鈥檚 balance of Accounts Receivable at May 31, 2018?

Accounting for uncollectible accounts using the allowance method

(aging-of-receivables) and reporting receivables on the balance sheet

At September 30, 2018, the accounts of Spring Mountain Medical Center (SMMC)

include the following:

During the last quarter of 2018, SMMC completed the following selected transactions:

鈥� Sales on account, \(475,000. Ignore Cost of Goods Sold.

鈥� Collections on account, \)451,800.

鈥� Wrote off accounts receivable as uncollectible: Randall, Co., \(1,800; Oliver Welch,

\)900; and Rain, Inc., \(500

鈥� Recorded bad debts expense based on the aging of accounts receivable, as follows:

Age of Accounts

1鈥�30 Days 31鈥�60

Days

61鈥�90

Days

Over 90

Days

Accounts Receivable \) 97,000 \( 37,000 \) 17,000 $ 14,000

Estimated percent uncollectible 0.3% 3% 30% 35%

Requirements

1. Open T-accounts for Accounts Receivable and Allowance for Bad Debts.

Journalize the transactions (omit explanations) and post to the two accounts.

2. Show how Spring Mountain Medical Center should report net accounts receivable

on its December 31, 2018, balance sheet.

Why must companies record accrued interest revenue at the end of the accounting period?
See all solutions

Recommended explanations on Business Studies Textbooks

Nature of Business

Read Explanation

Finance Literacy (Business Studies)

Read Explanation

International Business

Read Explanation

Business Case Studies

Read Explanation

Organizational Communication

Read Explanation

Managers

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.