5721 Discounting Notes Receivable PDF

Preview

Summary

business debt expense...

Description

Discounting Notes Receivable:[5721] Jennifer had an interest-bearing note receivable in the face amount of $12,000 that was created on May 1, Year 1. The note was the result of a sales transaction by Jennifer in the amount of $12,000. The note’s interest rate and due date were 7% and December 1, Year 1, respectively. Jennifer’s banker agreed to discount the note on July 1, Year 1. The banker’s discount rate was 9%. Required: What journal entry would Jennifer make on July 1, Year 1, when the banker accepted the note and paid Jennifer the proceeds from the discounting transaction?

Jose had an interest-bearing note receivable in the face amount of $14,000 that was created on February 1, Year 1. The note was the result of a sales transaction by Jose in the amount of $14,000. The note’s interest rate and due date were 9% and November 1, Year 1, respectively. Jennifer’s banker agreed to discount the note on May 1, Year 1. The banker’s discount rate was 6%. Required: What journal entry would Jose make on July 1, Year 1, when the banker accepted the note and paid Jose the proceeds from the discounting transaction?...