Financial Accounting: An Integrated Statements Approach, 2nd Edition

The following selected transactions were completed by Lupine Co., a supplier of elastic bands

for clothing:

2006

Dec. 13 Received from Stout Co., on account, a $30,000, 120-day, 9% note dated December 13.

31 Recorded an adjusting entry for accrued interest on the note of December 13.

2007

Apr. 12 Received payment of note and interest from Stout Co.

Journalize the transactions.

Journalize the following transactions of Theres Productions:

July 3 Received a $150,000, 90-day, 8% note dated July 3 from Hermes Company on account.

Oct. 1 The note is dishonored by Hermes Company.

31 Received the amount due on the dishonored note plus interest for 30 days at 10% on the

total amount charged to Hermes Company on October 1.

Journalize the following transactions in the accounts of Dimitrious Co., which operates a river-

boat casino:

Apr. 1 Received a $10,000, 30-day, 6% note dated April 1 from Wilcox Co. on account.

18 Received a $12,000, 30-day, 9% note dated April 18 from Aaron Co. on account.

May 1 The note dated April 1 from Wilcox Co. is dishonored, and the customer’s account is

charged for the note, including interest.

June 17 The note dated April 18 from Aaron Co. is dishonored, and the customer’s account is

charged for the note, including interest.

July 30 Cash is received for the amount due on the dishonored note dated April 1 plus interest

for 90 days at 8% on the total amount debited to Wilcox Co. on May 1.

Sept. 3 Wrote off against the allowance account the amount charged to Aaron Co. on June 17

for the dishonored note dated April 18.

382 Chapter 8 Receivables

CASH

(7) 23,028

NOTES RECEIVABLE

(5) 22,000 (6) 22,000

ACCOUNTS RECEIVABLE

(1) 25,000 (3) 3,000

(6) 22,725 (5) 22,000

(7) 22,725

SALES RETURNS AND ALLOWANCES

(3) 3,000

MERCHANDISE INVENTORY

(4) 1,800 (2) 15,000

COST OF MERCHANDISE SOLD

(2) 15,000 (4) 1,800

SALES

(1) 25,000

INTEREST REVENUE

(6) 725

(7) 303

Exercise 8-22

Entries for notes receivable,

including year-end entries

Goal 6

Exercise 8-23

Entries for receipt and

dishonor of note receivable

Goal 6

Exercise 8-24

Entries for receipt and dis-

honor of notes receivable

Goals4, 6