Question
ohn Cramer owns a toy shop called John's Toys. The total accounts receivable balance of John's Toys on January 31, 2011 was $78,000. On February
ohn Cramer owns a toy shop called John's Toys. The total accounts receivable balance of John's Toys on January 31, 2011 was $78,000. On February 1, 2011, Mr. M. Ledger who owes the company $13,300 informs that he will be unable to pay the amount owing in the present year. However, he agrees to sign a two-year note to be paid in semi-annual installments, plus interest at the annual rate of 3.5% on the balance outstanding. The company's year end is December 31.
Calculate the interest revenue and payment amounts for each year. Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole dollar.
Date | Opening Balance (a) | Interest (b) | Total (a+b) | Payment | Closing Balance |
Feb 1, 2011 | Answer | Answer | |||
Aug 1, 2011 | Answer | Answer | Answer | Answer | Answer |
Feb 1, 2012 | Answer | Answer | Answer | Answer | Answer |
Aug 1, 2012 | Answer | Answer | Answer | Answer | Answer |
Feb 1, 2013 | Answer | Answer | Answer | Answer | Answer |
b) Prepare the journal entry on February 1, 2011 when the note is signed and on August 1, 2011 when the first payment is made. Enter the credit accounts in alphabetical order.
Date | Account Title and Explanation | Debit | Credit |
Feb 1 | AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashCommon SharesCost of Goods SoldInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid ServicesProperty, Plant & EquipmentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense | Answer | |
AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashCommon SharesCost of Goods SoldInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid ServicesProperty, Plant & EquipmentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense | Answer | ||
Issue note receivable to replace accounts receivable | |||
Aug 1 | AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashCommon SharesCost of Goods SoldInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid ServicesProperty, Plant & EquipmentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense | Answer | |
AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashCommon SharesCost of Goods SoldInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid ServicesProperty, Plant & EquipmentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense | Answer | ||
AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashCommon SharesCost of Goods SoldInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid ServicesProperty, Plant & EquipmentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense | Answer | ||
Record receipt of interest and principal |
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