Chapter 8: Q4TI (page 455)

On August 1, Taylor Company lent $80,000 to L. King on a 90-day, 5% note.
12. Journalize for Taylor Company the lending of the money on August 1.
13. Journalize the collection of the principal and interest at maturity. Specify the date. Round interest to the nearest dollar.

Short Answer

Expert verified

(12) Notes receivable- L. King will be debited and cash will be credited by $80,000, respectively.

(13) Cash account will be debited by $80,986 and Notes Receivable- L. King will be credited by $80,000 and interest revenue will be credited by $986.

Step by step solution

Definition of notes receivable

The note is a written contract issued by the borrower to the lender. In this, the borrower promises to pay the money back on some future date.

Journal entry for lending the money

Date	Particulars	Debit	Credit
August 1	Notes Receivable- L. King	$80,000
	Cash		$80,000
	(Accepting notes in exchange for cash)

Journal entry for the maturity of the bond

Date	Particulars	Debit	Credit
October 30	Cash	$80,986
	Notes Receivable- L. King		$80,000
	Interest Revenue ($80,000 x 5% x 90/365)		$986
	(Collection of notes and interest)

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Apr. 15	Provided consulting services to Bob Jones and billed the customer \(1,500.
18	Provided consulting services to Samantha Cruise and billed the customer \)865.
25	Received \(750 cash from Jones.
28	Provided consulting services to Regan Taylor and billed the customer \)625.
28	Received \(865 cash from Cruise.
30	Received \)1,375 cash, \(750 from Jones and \)625 from Taylor

Age of Accounts
	1–30 Days	31–60 Days	61–90 Days	Over 90 Days
Accounts Receivable	\( 65,000	\) 50,000	\(40,000	\)45,000
Estimated percent uncollectible	0.4%	3.0%	5.0%	48.0%

On August 1, Taylor Company lent $80,000 to L. King on a 90-day, 5% note.
12. Journalize for Taylor Company the lending of the money on August 1.
13. Journalize the collection of the principal and interest at maturity. Specify the date. Round interest to the nearest dollar.

Short Answer

Step by step solution

Definition of notes receivable

Journal entry for lending the money

Journal entry for the maturity of the bond

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Organizational Behavior

Introduction to Business

Human Resources

Corporate Finance

Managerial Economics

Business Operations

Study anywhere. Anytime. Across all devices.

On August 1, Taylor Company lent $80,000 to L. King on a 90-day, 5% note.12. Journalize for Taylor Company the lending of the money on August 1.13. Journalize the collection of the principal and interest at maturity. Specify the date. Round interest to the nearest dollar.

Short Answer

Step by step solution

Definition of notes receivable

Journal entry for lending the money

Journal entry for the maturity of the bond

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Organizational Behavior

Introduction to Business

Human Resources

Corporate Finance

Managerial Economics

Business Operations

Study anywhere. Anytime. Across all devices.

On August 1, Taylor Company lent $80,000 to L. King on a 90-day, 5% note.
12. Journalize for Taylor Company the lending of the money on August 1.
13. Journalize the collection of the principal and interest at maturity. Specify the date. Round interest to the nearest dollar.