(1) Compute the interest for the following notes and assume at 360 day year for all quizzes, homework, etc.
Date of Note Principle Interest Rate (%) Term Interest
July 1 $100,000 10% 90 Days
January 1 $70,000 8% 120 Days
September 1 $200,000 6% 60 Days
(2) On June 1, 2015, Hardy and Company sold merchandise on account to Laurel Company for $16,000 with terms of 2/10 net 30. On June 30, Laurel Company gave Hardy a 10% Promissory Note to settle the account. Make the journal entries to record the sale and settlement of the account receivable.
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(3) The financial statements of Lawn Mowers Inc. report beginning accounts receivable of $100,000 and ending accounts receivable of $105,000. Net credit sales were $1,200,000 for the year. Calculate the accounts receivable turnover and average collection period in days. Use a 365 day year.
a) Accounts Receivable Turnover
(b) Average Days To Collect
(4) Lost in The Woods Trading Company borrows $70,000 at 3% interest from the Bonnie and Clyde Untrustworthy Bank on June 1, 2014. The note is due in one year.
(A) Make the journal entries on the books of the Lost in Woods Trading Company for (1) the acceptance of the note, (2) the adjusting entry on December 31, 2014, and (3) the payoff of the loan on May 31, 2015.
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(B) Make the journal entries on the books of the Bonnie and Clyde Untrustworthy Bank for (1) issuance of the note, (2) the adjusting entry on December 31, 2014, and (3) the payoff of the loan on May 31, 2015.
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