Question

ULLE alize the following transactions for Rochester Company 20XX May of 18 Received a $15,000, 80-day, 11% note from Mark Castle in payment of account past due. Wrote off the Hal Balmer account as uncollectible for $600. (Rochester uses the Allowance method to record bad debts.) July 7 Mark Castle paid Rochester the note in full. Nov. 11 Gave Reech Company a $9,000, 30-day, 12% note as a time extension of account now past due. Nov. 15 Hal Balmer paid Rochester amount previously written off on May 9. Dec. 3 Discounted its own $5,000, 90-day note at Tree Bank at 10% Dec. 5 Received a $10,000, 60-day, 12% note dated December 5 from Beverly Fields in payment of account past due. Dec. 11 Paid principal and interest due on note issued to Reech Company from November 11 note. Dec. 16 Received a $20,000, 60-day, 11% note from Larry Company in payment of account past due. Dec. 28 Discounted the Beverly Fields note to Realty Bank at 13%. Dec. 31 Recorded adjusting entries as appropriate. in D

Answer 1

Debit Credit 31 Date Account Title & Explanation 32 20xx 33 18-Apr 11% Notes Receivable Accounts Receivable (To record receipt of notes receivable in pament of past due) 15000 15000 37 600 9-May Allowance for Bad Debt Accounts Receivable (To record write off of Hal Balmer account) 600 15366.67 7-Jul Cash 11% Notes Receivable Interest Revenue (15000*11%*80/360) (To record receiptof note including interest) 15000 366.67 44 45 46 9000 11-Nov Accounts Payable 12 % Notes Payable (To record issue of note payable as a time extension) 9000 600 15-Nov Accounts Receivable Allowance for Doubtful Accounts (To record reinstate the account) 600

Cash Accounts Receivable (To record collection of uncollectibles) 600 4875 125 3-Dec Cash Discount on Notes Payable (5000*10%*90/360) Notes Payable (To record discountingof own note) 5000 10000 5-Dec 12% Notes Receivable Accounts Receivable (To record receipt of notes receivable in pament of past due) 10000 9000 90 11-Dec 12 % Notes Payable Interest expense (9000*12%*30/360) Cash (TO record payment of interest) 9090 70 20000 16-Dec 11% Notes Receivable Accounts Receivable (To record receipt of notes receivable in pament of past due) 73 74 20000

10063.72 12.95 Face value of Note Interest expense Maturity value 10000 76.67 Discount 10000 200 10200 28-Dec Cash Interest expense 12% Notes Receivable Interest Revenue (To reord discounting of note) 10200*13%*37/360 136.28 91.67 31-Dec Interest Receivable (20000*11%*15/360) Interest Revenue (To record accrual of interest revenue) 91.67 Interest Revenue earned on 23 days 76.67 Maturity Value Less discount Discounted value of note 10200 -136.28 10063.72 Notes face value Add Interest Revenue earned 10000 76.67 10076.67 -10063.72 Less Discounted value of note Interest expense 12.95