Question
On September 1, 2020, Splish Brothers Inc. sold goods to Marigold Corp., a new customer. Before shipping the goods, Splish Brotherss credit and collections department
On September 1, 2020, Splish Brothers Inc. sold goods to Marigold Corp., a new customer. Before shipping the goods, Splish Brotherss credit and collections department conducted a procedural credit check and determined that Marigold is a high credit-risk customer. As a result, Splish Brothers did not provide Marigold with open credit by recording the sale as an account receivable. Instead, Splish Brothers required Marigold to provide a noninterest-bearing promissory note for $33,300 face value, to be repaid in one year. Marigold has a credit rating that requires it to pay 11% interest on borrowed funds. Splish Brothers pays 9% interest on a loan recently obtained from its local bank. Splish Brothers has a December 31 year end. The tables in this problem are to be used as a reference for this problem.
Prepare the entries required on Splish Brothers's books to record the sale, annual adjusting entry, and collection of the note's full face value. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record interest income) (To record collection of the note receivable) Assume that on the note's maturity date, Marigold informs Splish Brothers that it is having cash flow problems and can only pay Splish Brothers only 80% of the note's face value. After extensive discussions with Marigold's management, Splish Brothers's credit and collections department considers the remaining balance of the note uncollectible. Prepare the entry required on Splish Brothers's books on the note's maturity date. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit e Textbook and Media
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