Details of Notes Receivable and Related Entries Gen-X Ads Co. produces advertisi

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:

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.

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.

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".

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

Explanation / Answer

1.

2. JOURNAL ENTRY

29. OCT. DRAWEE A/C DR.

                     TO BILLS RECEIVABLE

             ( BILL DISHONOURED ON DUE DATE )

3. JOURMAL ENTRY ON 31 DECEMBER,

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

4. JOURNAL ENTRY

JAN. 14 BANK A/C DR.

                    TO INTEREST A/C

(INTEREST RECEIVED ON NOTE-5.)

540

JAN. 26    BANK A/C DR.

      TO INTEREST A/C

(INTEREST RECEIVED ON NOTE-6.)

480

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.

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