On April 2, 2019, Wu Company received a 6-month, 8 percent interest-bearing note from Jenna Blackmon in
Question:
On April 2, 2019, Wu Company received a 6-month, 8 percent interest-bearing note from Jenna Blackmon in settlement of a past-due account receivable of $15,000. On May 3, Wu discounted this note at Mercantile State Bank. The bank charged a discount rate of 10 percent. On October 2, Wu received word that the note and interest had been paid in full.
1. Give all entries, in general journal form, to record these events.
2. Assume that Blackmon had failed to pay the note and that the bank charged Wu’s account with the note and a $50 protest fee. Give the journal entry(ies) necessary to record these facts.
Analyze: What amount of interest income or interest expense will Wu report in 2019 as a result of these transactions assuming Blackmon paid the note when due?
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
Step by Step Answer:
GENERAL JOURNAL PAGE DATE DESCRIPTION POST REF DEBIT CREDIT 1 2019 1 1 2 Apr 2 Notes Receiv...View the full answer
College Accounting Chapters 1-30
ISBN: 978-1259631115
15th edition
Authors: John Price, M. David Haddock, Michael Farina
