Question

Following are transactions of the Wipe-Out Company: Mar. 2 21 Apr. June Accepted a $10,440, 5%, 90-day note dated this day in granting a time extension on the past-due account of JNC Company. Discounted, with recourse, the JNC Company note at BancFirst at a cost of $50. Received notice from BancFirst that JNC Company defaulted on the note due May 31. Paid the bank the principal plus interest due on the note. (Hint: Create an account receivable for the maturity value of the note. ) Received payment from JNC Company for the maturity value of its dishonoured note plus interest for 45 days beyond maturity at 5%. Accepted a $4,240, 60-day, 5% note dated this day in granting Cecile Duval a time extension on her past-due account. Discounted, without recourse, the Duval note at BancFirst at a cost of $25. July 16 Sept. 3 18 Required: Prepare entries to record the above transactions. (Use 365 days in a year. Do not round intermediate calculations. Round the final answers to 2 decimal places.)

Answer 1

Refer a below image for the above asked entries, in a detailed way of solution.

solution: Journal entries : Date particulars Mar a credit Notes To Receivable Accounts al or Receivable a Sne company • Debit $10440 $ 10440 Apr 21 cash ale Dr Interact expense ale or TO Notes Receivable. & 10390 850 & 10440 June 2 Accounts So $1172712 Receivable - Inc Company Al Dr $11727-12 cast AlG [ $ 104,40 + (1 104404005490 : $11707.12 365 July 16 Cash Ale Dr $ 11799.41 To Interest Revenue & 72.29 To Accounts Receivable -jwc company 311727-12 [ $ 1172712 x 51.445] =72.29 36 44240 Sept.3 Notes Receivable al To Accounts or Receivable a ceatle Doval ६५२५० ६५015 cash AK BY Interest expense ale or po Notes Receivable $25 ६५२५०