Lendshigleyinc10000onjune

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Unformatted text preview: es to record the disposition of notes receivable. Notes Receivable Notes Receivable Disposing of Notes Receivable Honor of Notes Receivable A note is honored when its maker pays it in full at its maturity date. Dishonor of Notes Receivable A dishonored note is not paid in full at maturity. Dishonored note receivable is no longer negotiable. Chapter 8-27 SO 5 Describe the entries to record the disposition of notes receivable. Notes Receivable Notes Receivable Honor of Notes Receivable Illustration: Assume that Wolder Co. lends Higley Inc. $10,000 on June 1, accepting a five­month, 9% interest note. If Wolder presents the note to Higley Inc. on November 1, the maturity date, Wolder’s entry to record the collection is: Jun. 1 Cash 10,375 Notes receivable 10,000 Interest revenue 375 ($10,000 x 9% x 5/12 = $ 375) Chapter 8-28 SO 5 Describe the entries to record the disposition of notes receivable. Notes Receivable Notes Receivable Accrual of Interest Illustration: Suppose instead that Wolder Co. prepares financial statements as of September 30. Prepare the adjusting entry by Wolder is for four months ending Sept. 30. Sept. 30 Interest receivable Interest revenue Chapter 8-29 300 300 ($10,000 x 9% x 4/12 = $ 300) SO 5 Describe the entries to record the disposition of notes receivable. Notes Receivable Notes Receivable Honor of Notes Receivable Illustration: Prepare the entry Wolder’s would make to record the honoring of the Higley note on November 1. Nov. 1 Cash Notes receivable 10,375 10,000...
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This document was uploaded on 12/18/2013.

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