Download Chapter 16 Chapter 16 1- A Prepare journal entries for the following

Chapter 16
1
Chapter 16 1-A
Prepare journal entries for the following selected transaction of Dulcinea Company.
2010
Dec 13
Accepted a $9,500, 60-day, 8% note dated December 13 in granting Miranda Lee a time
extension on her past due account receivable.
Dec 31
Prepared an adjusting entry to record the accrued interest on the Lee note.
2011
Feb 11
Received Lee’s payment for principal and interest on the note dated December 13.
Mar 3
Accepted a $5,000, 10%, 90-day note dated March 3 in granting a time extension on the
past due account receivable of Tomas Company.
17
Accepted a $2,000, 30-day, 9% note dated March 17 in granting Hiroshi Cheng a time
extension on his past-due account receivable.
Apr 16
Cheng dishonors his note when presented for payment
June 1
Received the Tomas payment for principal and interest on the note dated March 3.
Problem 16-2A
The following selection transaction is from Neil Martin Inc.
2010
Mar 2
Accepted a $6,120, 8%, 90-day note dated this day in granting a time extension on the
past due account receivables from Midnight Co.
17
Accepted a $2,400, 30-day, 7% note dated this day in granting Ava Privet a time
extension on per past-due account receivable.
16
Privet dishonored her note when presented for payment.
June 2
Midnight Co. refuses to pay the note that was due to Neil Martin, Inc. on May 31.
Prepare the journal entry to charge the dishonored note plus accrued interest to
Midnight Co.’s accounts receivable.
July 17
Received payment from Midnight Co. for the maturity value of its dishonored note plus
interest for 46 days beyond maturity at 8%.
Dec 1
Wrote off the Ava Privet account against Allowance for Doubtful Accounts.
Chapter 16
2
Problem 16-3A
On July 1, Whyte Co. accepted a $20,000, 90-day, 12% notes from Olson Inc. for the purchase of
equipment. On July 31, Whyte discounts the note receivable at First Federal Savings. The bank charges a
discount rate of 15%.
Required
1. Record the journal entry for receipt of the note on July 1.
2. Record the journal entry for the discounted note receivable on July 31.
Problem 16-4A
On November 1, 2010, Norwood borrows $200,000 cash from a bank by signing a five-year installment
note bearing 8% interest. The note requires equal annual payments of $50,091 each year on October 31.
1.
Complete an amortization table for this installment note similar to the one in this example
Debit
Period
Ending
Date
1 12/31/2010
2 12/31/2010
3 12/31/2010
Beginning
Principal
Balance
$
60,000
51,821
42,988
Interest
Expense
8% x A
$
4,800
4,146
3,439
4 12/31/2010
33,448
2,676
15,061
$
Debit
P
l
u
s
Credit
Credit
Notes
Payable B-D
$
8,179
8,833
9,540
Cash
= (computed)
$
12,979
12,979
12,979
Ending
Principal
Balance
A-C
$
51,821
42,988
33,448
10,303
36,855
12,979
51,916
23,145
151,402
$
$
$
Expense + Payables + Cash
2. Prepare the journal entries in which Norwood
a. Records accrued interest as of December 31, 2010 (the need of its annual reporting
Period), and then
b. The first annual payment on the note.