Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On August year Hampton Construction received a percent6month receivable from Dusty Roadsone of Hampton Construction's problem credit customers. Roads had owed $43.200 an outstanding account

On August year Hampton Construction received a percent6month receivable from Dusty Roadsone of Hampton Construction's problem credit customers. Roads had owed $43.200 an outstanding account receivable. The note receivable was taken in settlement of this amount Assume that Hampton Construction makes adjusting entries for accrued interest revenue once each year on December 31.

a. Journalize the following four events on the books of Hampton Construction

1. Record the receipt of the note on August 1 in settlement of the account receivable.

2. Record accrued interest at December 31. year 1

3. Assume that Dusty Roads pays the note plus accrued interest in full. Record the collection of the principal and interest on January 31. year 2.

4. Assume that Dusty Roads did not make the necessary principal and interest payment on January 31, year 2. Rather assume that he defaulted on his obligation. Record the default on January 31 , year 2.

b . Indicate the effects of each of the four transactions journalized in part a on the elements of the statement shown Use the code letters I for increase, D for decrease and for effect.

Transaction Revenue -Expenses = Net Income Assets =Liabilities + Equity

1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Cost Accounting

Authors: Edward J. Vanderbeck

15th Edition

978-0840037039, 0840037031

More Books

Students also viewed these Accounting questions

Question

3. Make extra-credit work available to add points to course grades.

Answered: 1 week ago