Question

812 0 you ppiea jor an Accounts Manager's position. Because of the large number of qualified applicants, the company conducts an accounting test comprising the following questions. You decide to take the test. (Show your workings for the below questions, on the templates provided). 1. Wilburn purchased merchandise from Roaders Co. on October16 of the current year. and issued a 90days note payable to Roaders Co. for $6,200, at 6 %. a. What entry should Roaders Co. make on December 31, the end of the fiscal year? Date Accounts Dr. Cr b. What entry will Roaders Co. record in its accounts when the note is eventually paid.? Date Accounts Dr. Cr.

Answer 1

Answer to Question 1. Debit Credit Dec 31 b. Jan 14 General Journal Interest Receivable Interest Revenue (To record Interest accrued) Cash Notes Receivable Interest Receivable Interest Revenue ($6,200 *6% * 14/365) (To record maturity of note) 6,291 6,200 77 Calculation: On December 31: Period for which interest is accrued = October (31 - 16) + November (30 days) + December (31 days) Period for which interest is accrued = 76 days Interest accrued = $6,200 * 6% * 76/365 Interest accrued = $77 On Maturity Date: Maturity Date = 15 days (October) + 30 days (November) +31 days (December) + 14 days (January) Maturity Date = January 14, Next Year