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 year ending December 31, Gen-X Ads 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".

Check My Work3 more Check My Work uses remaining.

Date Face Amount Term Interest Rate 1. Apr. 10 $75,000 60 days 4 % 2. June 24 16,800 30 days 6 3. July 1 72,000 120 days 6 4. Oct. 31 72,000 60 days 9 5. Nov. 15 54,000 60 days 6 6. Dec. 27 180,000 30 days 4

Explanation / Answer

1) Due interest due at maturity date 1 9-Jun 500 2 24-Jul 84 3 29-Oct 1440 4 30-Dec 1080 5 14-Jan 540 6 26-Jan 600 2) Date Account titles & explanations Debit Credit 29-Oct account receivable 73,440 interest income 1,440 note receivable 72,000 31-Dec interest receivable 494 interes income 494 (note 5    = 54,000*6%*46/360) note 6     = 180,000*4%*4/360) 14-Jan cash 54,540 note receivable 54,000 interest receivable 414 interest income 126 26-Jan cash 180,600 note receivable 180,000 interest receivable 80 interest income 520

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