Question

Notes Receivable On September 1, 2017, Seacrest Inc, accepted a six-month, $48,600 interest-bearing note from Delgado Enterprises in payment of an account receivable. Seacrest's year-end is December 31. Delgado paid the note and interest on the due date. Assume 360 days in the year, Required: 1. Who is the maker and who is the payee of the note? The makers Seacrest Inc. and the payee is Delgado Enterprises 2. What is the maturity date of the note> March 1, 2018 3. Identity and analyze the effect of the transactions or adjustments to be recorded on each of the following dates: a. September 1, 2017 Activity Operating Accounts Statement(s)

Answer 1

1. The maker is Delgado Enterprises and the payee is Seacrest Inc. 2. March 1, 2018 3. a. Sept. 1, 2017 Activity: Operating Accounts: Notes receivable Increase, Accounts receivable Decreases Statements: Balance sheet 3. b. December 31, 2017 Activity: Operating Accounts: Interest receivable Increase, Interest revenue Increases Statements: Balance sheet and Income statement 3. c. March 31, 2018 Activity: Operating Accounts: Cash Increase, Interest receivable Decrease, Note receivable Decrease, Interest revenue Increases Statements: Balance sheet and Income statement

September 1, 2017 Income statement Expenses + Equity Revenue = Net income Assets Note receivable Accounts receivable Balance sheet Liabilities 48,600 -48,600 December 31, 2017 Balance sheet Liabilities + Assets Interest receivable Equity Revenue 1,134 Interest revenue Income statement Expenses 1,134 = Net income 1,134 1,134 Interest revenue on Dec. 31, 2017 -48,600x7%x4/12 =$1,134 March 1, 2018 Assets Balance sheet Liabilities 50,301 -1,134 -48,600 Equity Revenue 567 Interest revenue Income statement Expenses 567 = Net income 567 Cash Interest receivable Note receiavable Cash received = 48,600 + ( 48,600x7%x6/12) =$48,600+1,701 =50,301 Interest revenue on Mar. 1, 2018 = 48,600x7%x2/12 =$567