On August 1, 2015, Cappuccitti Limited accepted a two-month, 4%, $30,000 note from Dil-Dil Inc. in settlement
Question:
On August 1, 2015, Cappuccitti Limited accepted a two-month, 4%, $30,000 note from Dil-Dil Inc. in settlement of its account. Interest is due on the first day of each month, starting September 1. Both companies' year ends are August 31.
Instructions
(a) Prepare all journal entries for Cappuccitti over the term of the note. Assume that the note is collected in full on the maturity date.
(b) Prepare all journal entries for Dil-Dil over the term of the note. Assume that the note is paid in full on the maturity date.
(c) Assume that instead of honouring the note at maturity, Dil-Dil dishonours it. Prepare the necessary journal entry on Cappuccitti's books at the maturity date, October 1, 2015, assuming that eventual collection of the note is (1) expected, and (2) not expected. Interest was last paid by Dil-Dil on September 1.
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
a Aug 1 Notes Receivable 30000 Accounts Receivable 30000 31 Interest Receiva...View the full answer
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
