Question

1.

Entries for Notes Receivable

Valley Designs issued a 90-day, 9% note for $36,000, dated April 19, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest.

a. Determine the due date of the note.

b. Determine the maturity value of the note.
$

c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank.

c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank.

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2.

Bank Reconciliation

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:

1. Cash balance according to the company's records at August 31, $26,360.
2. Cash balance according to the bank statement at August 31, $27,710.
3. Checks outstanding, $5,350.
4. Deposit in transit, not recorded by bank, $4,300.
5. A check for $480 in payment of an account was erroneously recorded in the check register as $840.
6. Bank debit memo for service charges, $60.

a. Prepare a bank reconciliation, using the format shown in Exhibit 13.

Creative Design Co.
Bank Reconciliation
August 31, 20Y6
Cash balance according to bank statement		$
	$
Adjusted balance		$
Cash balance according to company's records		$
Adjusted balance		$

Answer 1

a. Determine the due date of the note. = (April 11 days + May 31 days + June 30 days + July 18 days) = July 18 b. Determine the maturity value of the note. Interest = $36,000 x 9% x 90/360 = $810 The maturity value is $36,810 (principal + interest). c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank. April5 Dr Notes Receivable $36,000 Cr Accounts Receivable $36,000 c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank. July 18 Dr Cash $36,810 Cr Notes Receivable $36,000 Crinterest Revenue $810

2a) Creative Design Co. Bank Reconciliation August 31, 2046 Cash balance according to bank statement $27,710 Add: Deposit in transit, not recorded by bank $4,300 $4,300 Less: Checks outstanding ($5,350) ($5,350) Adjusted balance $26,660 Cash balance according to company's records $26,360 Add: Error in recording check as $840 instead of $480 $360 $360 Less: Bank Service Charge ($60) ($60) Adjusted balance $26,660