The following data relate to notes receivable and interest for CGH Cable Co., a
ID: 2462428 • Letter: T
Question
The following data relate to notes receivable and interest for CGH Cable Co., a cable manufacturer and supplier. (All notes are dated as of the day they are received.)
Apr. 10.
Received a $144,000, 5%, 60-day note on account.
May 15.
Received a $270,000, 7%, 120-day note on account.
June 9.
Received $145,200 on note of April 10.
Aug. 22.
Received a $150,000, 4%, 45-day note on account.
Sept. 12.
Received $276,300 on note of May 15.
30.
Received a $210,000, 8%, 60-day note on account.
Oct. 6.
Received $150,750 on note of August 22.
18.
Received a 120,000, 5%, 60-day note on account.
Nov. 29.
Received $212,800 on note of September 30.
Dec. 17.
Received $121,000 on note of October 18.
Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS
CGH Cable Co.
General Ledger
ASSETS
110
Cash
111
Petty Cash
120
Accounts Receivable
129
Allowance for Doubtful Accounts
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
312
Income Summary
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
Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Apr. 10.
Received a $144,000, 5%, 60-day note on account.
May 15.
Received a $270,000, 7%, 120-day note on account.
June 9.
Received $145,200 on note of April 10.
Aug. 22.
Received a $150,000, 4%, 45-day note on account.
Sept. 12.
Received $276,300 on note of May 15.
30.
Received a $210,000, 8%, 60-day note on account.
Oct. 6.
Received $150,750 on note of August 22.
18.
Received a 120,000, 5%, 60-day note on account.
Nov. 29.
Received $212,800 on note of September 30.
Dec. 17.
Received $121,000 on note of October 18.
Explanation / Answer
The journal entry for receipt of notes on account is as under:
April 10 Notes Receivable Account $144,000
Accounts Receivable $144,000
(Being notes of 5%, 60 days received on account)
The journal entry for receipt of notes on account is as under:
May 15th Notes Receivable Account $270,000
Accounts Receivable $270,000
(Being notes of 7%, 120 days received on account)
The journal entry for recording cash received for Principal and interest amount received on notes of 5% received on April 10th is as under:
9th June Cash Account $145,200
Notes Receivables $144,000
Interest Revenue $ 1,200
(being cash received against notes receivables along with interest of $1,200 for 60 days @ 5% on $144,000)
Interest on Notes payable=$144,000*5%*60/360 =$1,200
Aug. 22 The journal entry for receipt of notes on account is as under:
Aug 22nd Notes Receivable Account $150,000
Accounts Receivable $150,000
(Being notes of 4%, 45 days received on account)
Sept. 12 The journal entry for receipt of cash against notes received on May 15th amounting $276,300 is as under:
The notes is of $270,000. The cash received against notes is $276,300. The difference amount is the interest revenue earned by the company for 120 days @ 7% on $270,000.
Interest revenue earned = ($270,000*7%)*120/360
= $6,300.
12th Sept. Cash Account $276,300
Notes Receivables $270,000
Interest Revenue $ 6,300
(Being cash received against notes receivables along with interest of $6,300 for 120 days @ 7% on $270,000)
30th Sept. The journal entry for receipt of notes on account is as under:
30th Sept. Notes Receivable Account $210,000
Accounts Receivable $210,000
(Being notes of $210,000, 8%, 60 days received on account)
6th Oct. The journal entry for receipt of cash against notes received on Aug 22nd amounting $150,750 is as under:
The note is of $150,000. The cash received against notes is $150,750. The difference amount is the interest revenue earned by the company for 45 days @ 4% on $150,000.
Interest revenue earned = ($150,000*4%)*45/360
= $750.
6th Oct. Cash Account $150,750
Notes Receivables $150,000
Interest Revenue $ 750
(Being cash received against notes receivables along with interest of $750 for 45 days @ 4% on $150,000)
18TH Oct. The journal entry for receipt of notes on account is as under:
18th Oct. Notes Receivable Account $120,000
Accounts Receivable $120,000
(Being notes of $120,000, 5%, 60 days received on account)
29th Nov. The journal entry for receipt of cash against notes received on 30th Sept. amounting $212,800 is as under:
The note is of $210,000. The cash received against notes is $212,800. The difference amount is the interest revenue earned by the company for 60 days @ 8% on $210,000.
Interest revenue earned = ($210,000*8%)*60/360
= $2,800.
29th Nov. Cash Account $212,800
Notes Receivables $210,000
Interest Revenue $ 2,800
(Being cash received against notes receivables along with interest of $2,800 for 60 days @ 8% on $210,000)
Dec. 17th The journal entry for receipt of cash against notes received on 18th Oct. amounting $121,000 is as under:
The note is of $120,000. The cash received against notes is $121,000. The difference amount is the interest revenue earned by the company for 60 days @ 5% on $120,000.
Interest revenue earned = ($120,000*5%)*60/360
= $1,000.
17th Dec. Cash Account $121,000
Notes Receivables $120,000
Interest Revenue $ 1,000
(Being cash received against notes receivables along with interest of $1,000 for 60 days @ 5% on $120,000)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.