Question

Details of Notes Receivable and Related Entries

Gen-X Ads Co. produces advertising videos. During the current fiscal year, Gen-X Ads Co. received the following notes:

	Date	Face Amount		Interest Rate		Term
1.	Apr. 10	$84,000		4%		60	days
2.	June 24	13,200		6		30	days
3.	July 1	72,000		6		120	days
4.	Oct. 31	72,000		5		60	days
5.	Nov. 15	54,000		6		60	days
6.	Dec. 27	108,000		4		30	days

Required:

Assume 360 days in a year.

Journalize the entry to record the dishonor of Note (3) on its due date. If an amount box does not require an entry, leave it blank or enter "0".

Jul.	Accounts Receivable
	Notes Receivable
	Interest Revenue

3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31.

Dec. 31	Interest Receivable
	Interest Revenue

4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. If an amount box does not require an entry, leave it blank or enter "0".

Jan. 14
Jan. 26

Answer 1

2)	Date	Account titles & explanations				Debit	Credit
	29-Oct	account receivable				73,440
		interest income					1,440
		note receivable					72,000
3)	31-Dec	interest receivable				462
		interes income					462
		(note 5    = 54,000*6%*46/360)
		note 6     = 108,000*4%*4/360)
4)	14-Jan	cash				54,540
		note receivable					54,000
		interest receivable					414
		interest income					126
	26-Jan	cash				108,360
		note receivable					108,000
		interest receivable					48
		interest income					312