On December 11, 2013, Hooper Inc. made a credit sale to Trotter Company and required Trotter to

Question:

On December 11, 2013, Hooper Inc. made a credit sale to Trotter Company and required Trotter to sign a $12,000, 60-day note.

Required:

Prepare the journal entries necessary to record the receipt of the note by Hooper, the accrual of interest on December 31, 2013, and the customer's repayment on February 9, 2014, assuming:

1. Interest of 12% was assessed in addition to the face value of the note.

2. The note was issued as a $12,000 non-interest-bearing note with a present value of $11,765. The implicit interest rate on the note receivable was 12%.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...