Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 16, Problem 16.14BE
Notes Receivable. Aaron Anatole accepted a $250,000, 4-year, non-interest-bearing note receivable upon a sale. The current market rate of interest is 8%. The note is not publicly traded. Prepare the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Recording the Sale of Accounts Receivable Without Recourse
On April 1, 2020, DOS Company sold $76,000 accounts receivable to PS2 Finance Company to obtain immediate cash. The related allowance for doubtful accounts was $3,040. The financial agreement specified a price of $60,800 on a without-recourse basis.
Prepare the journal entry for DOS Company to sell the accounts receivable.
Note: If a line in the journal entry isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answers blank(zero)
Account Name
Dr.
Cr.
Cash
Answer
Answer
Allowance for Doubtful Accounts
Answer
Answer
Answer
Answer
Answer
Answer
Answer
Answer
Answer
Answer
76,000
Assume that Rahma LLC sold OMR 2000 goods to Al Karama LLC on credit. After sales, based on the financial position of the purchaser, Rahma LLC anticipated OMR 400 as uncollectable accounts receivables. From the following given options, identify journal entry for writing off OMR400 balance as uncollectible on December 31st by following direct write-off method.
a. Dr Bad debt expenses A/c OMR 400 and Cr Allowance for doubtful accounts OMR 400
b. Dr Bad debt expenses A/C MR 400 and Cr Accounts receivables A/C OMR 400.
C. None of the given options
d. Dr Accounts receivables A/C OMR 400 and Cr Bad debt expenses A/C OMR 400
(Zero-Interest-Bearing Note Receivable) On September 30, 2016, Rolen Machinery Co. sold a machine and accepted the customer’s zero-interest-bearing note. Rolen normally makes sales on a cash basis. Since the machine was unique, its sales price was not determinable using Rolen’s normal pricing practices.After receiving the first of two equal annual installments on September 30, 2017, Rolen immediately sold the note with recourse. On October 9, 2018, Rolen received notice that the note was dishonored, and it paid all amounts due. At all times prior to default, the note was reasonably expected to be paid in full.Instructions(a) (1) How should Rolen determine the sales price of the machine?(2) How should Rolen report the effects of the zero-interest-bearing note on its income statement for the year ended December 31, 2016? Why is this accounting presentation appropriate?(b) What are the effects of the sale of the note receivable with recourse on Rolen’s income statement for the year ended…
Chapter 16 Solutions
Intermediate Accounting (2nd Edition)
Ch. 16 - Prob. 16.1QCh. 16 - Is reporting an investment at its cost considered...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Prob. 16.5QCh. 16 - Prob. 16.6QCh. 16 - What categories can managers use to classify...Ch. 16 - When is the equity method of accounting for...Ch. 16 - Prob. 16.9QCh. 16 - Can companies apply the fair value option to all...
Ch. 16 - What is the fair value hierarchy for investment...Ch. 16 - Prob. 16.12QCh. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Prob. 16.16QCh. 16 - Prob. 16.17QCh. 16 - Deutsch Imports has three securities in its...Ch. 16 - Prob. 16.2MCCh. 16 - Prob. 16.3MCCh. 16 - Prob. 16.4MCCh. 16 - Prob. 16.5MCCh. 16 - Prob. 16.6MCCh. 16 - Prob. 16.7MCCh. 16 - Prob. 16.1BECh. 16 - Prob. 16.2BECh. 16 - Debt Investments, Trading. Using the information...Ch. 16 - Prob. 16.4BECh. 16 - Prob. 16.5BECh. 16 - Prob. 16.6BECh. 16 - Prob. 16.7BECh. 16 - Prob. 16.8BECh. 16 - Prob. 16.9BECh. 16 - Prob. 16.10BECh. 16 - Prob. 16.11BECh. 16 - Prob. 16.12BECh. 16 - Prob. 16.13BECh. 16 - Notes Receivable. Aaron Anatole accepted a...Ch. 16 - Prob. 16.15BECh. 16 - Prob. 16.16BECh. 16 - Prob. 16.17BECh. 16 - Debt Investments. Impairments. IFRS. For each debt...Ch. 16 - Prob. 16.19BECh. 16 - Prob. 16.1ECh. 16 - Prob. 16.2ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Debt and Equity Investments, Available-for-Sale...Ch. 16 - Prob. 16.9ECh. 16 - Equity Investments without a Readily Determinable...Ch. 16 - Prob. 16.11ECh. 16 - Prob. 16.12ECh. 16 - Prob. 16.13ECh. 16 - Equity-Investments, Equity Method. Book Value of...Ch. 16 - Prob. 16.15ECh. 16 - Prob. 16.16ECh. 16 - Notes Receivable. Each of the following three...Ch. 16 - Notes Receivable. On January 1, 2018, Racine...Ch. 16 - Debt Investment, Held to Maturity, Impairments....Ch. 16 - Debt Investment, Impairments, IFRS. Repeat E16-19...Ch. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.1PCh. 16 - Debt Investments, Trading. Freder Software Group...Ch. 16 - Prob. 16.3PCh. 16 - Equity Investments, Readily Determinable Fair...Ch. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10PCh. 16 - Prob. 16.11PCh. 16 - Equity Investments, Equity Method, Fair Value...Ch. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Prob. 16.19PCh. 16 - Prob. 1JCCh. 16 - Prob. 2JCCh. 16 - Prob. 1SSCCh. 16 - Prob. 1BCCCh. 16 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer was able to negotiate with the company and transferred the accounts receivable into a note that includes interest, along with an up-front cash payment of $6,000. The note maturity date is 24 months with a 15% annual interest rate. What is the entry to recognize this transfer?arrow_forwardComputing the Proceeds from the Sale of Notes Receivable Below are several customer notes receivable that were sold without recourse. 1. An 8,000, 60-day, non-interest-bearing note sold after 15 days at 12%. 2. A 9,000, 12%, 60-day note sold alter 30 days at 14% 3. A 6,000, 10%, 90-day note sold after 30 days at 12% 4. A 10,000, 12%, 120-day note sold after 45 days at 15% Determine the proceeds from each of the preceding sales of customer notes receivable. (Assume a 360-day year.)arrow_forwardWe sold ABC company merchandise on account for $24,000 They were unable to pay it so we changed it to a notes receivable for 30 days at 7%. A) What is the journal entry to change the AR to a NR Debit Credit B) What is the journal entry to show receiving the payment for the note receivable and interest? Debit Creditarrow_forward
- 37.EXO Company accepted a P400,000 face value, six-month, 9% note dated May 15 from a customer. After holding the note for two months, EXO discounted the note without recourse at East Bank at a 12% discount rate and appropriately accounted the discounting as a sale. Accrued interest was appropriately recorded prior to discounting.What was the loss recognized by EXO Company on the sale of notes receivable?arrow_forwardNote receivable Prefix Supply Company received a 120-day, 7% note for $84,000, dated April 12 from a customer on account. Assume 360-days in a year. a. Determine the due date of the note. b. Determine the maturity value of the note. $ c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank. Earrow_forwardOn January 16, Gee Company accepted a P600,000, 10%, 90-day note from a customer. On February 15, the note was discounted at 12%. At maturity date, the note was dishonored and the bank charged a P2,500 protest fee. Compute the following assuming that the notes receivable was discounted with recourse – secured borrowing. 1. Maturity value 2. Net proceeds 3. Carrying amount of notes receivable 4. Debited to Loss on Discounting 5. Interest income 6. Interest expense 7. Debited to ‘Note receivable dishonored’ or ‘Accounts receivable’ as a result of the dishonored notearrow_forward
- On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. inexchange for a promissory note requiring five annual payments of $1,000 each. The paymentsare to occur on December 31 of each year beginning on December 31, 2011. The note does notspecify any interest, and there is no market for the note. Based on the credit worthiness of VillasBoas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10%interest if it borrowed a similar amount from a bank. The carrying value of the note on Chelsea’sbalance sheet on December 31, 2011?a. $4,041b. $3,737c. $3,170d. $2,992arrow_forward6. On December 31, 2010, Chelsea Co. provides a service for its customer Villas Boas Co. inexchange for a promissory note requiring five annual payments of $1,000 each. The paymentsare to occur on December 31 of each year beginning on December 31, 2011. The note does notspecify any interest, and there is no market for the note. Based on the credit worthiness of VillasBoas Co. and the length of the note, it is estimated that Villas Boas Co. would have to pay 10%interest if it borrowed a similar amount from a bank. The amount of interest revenue recognizedby Chelsea for the year ended December 31, 2013 is:a. $174b. $249c. $317d. $347arrow_forward1. A company maintains an allowance for doubtful accounts related to its credit sales. For each credit sale, 1% is estimated to be uncollectible. A company recently made a credit sale of $50,000, and the cost of goods sold related to the transaction was $40,000. What journal entries should be made related to this sale? 2. A company estimates its future warranty obligations at the time a sale is made. This estimate is 2% of sales. The company recently sold $100,000 in a cash sale that had an associated cost of goods sold of $70,000. What journal entries should be made related to this sale?arrow_forward
- Tamarisk, Inc. lent $12.136 to Martinez Corp., accepting Martinez's $12,500, three-month, zero-interest-bearing note. The implied interest is approximately 12%. Prepare Tamarisk's journal entries for the initial transaction and the collection of $12,500 at maturity. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation (To record initial transaction) (To record collection at maturity) Debit Credit DONarrow_forwardA debtor owes $3,675 on August 24th. The Note Holder sells the Note to a THIRD PARTY on May 17th, who wants an 11% Simple Interest Return. What does the Debtor Owe on August 24th? What does the THIRD PARTY pay for the note? (Use Banker's Rule, Round to the nearest penny, NO dollar signs, USE commas)arrow_forwardBramble Supply Co. has the following transactions related to notes receivable during the last 2 months of 2020. The company does not make entries to accrue interest except at December 31. How would I journalize the transactions for Bramble Supply Co? (Ignore entries for cost of goods sold.) Nov. 1 Loaned $ 13,200 cash to Manny Lopez on a 12-month, 10% note. Dec. 11 Sold goods to Ralph Kremer, Inc., receiving a $ 24,750, 90-day, 8% note. 16 Received a $ 29,100, 180 day, 8% note in exchange for Joe Fernetti’s outstanding accounts receivable. 31 Accrued interest revenue on all notes receivable.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY