Asked by Haneen Hmedat on Jun 29, 2024
Verified
Journalize the following transactions of Upton Drugs:July 8Received a $180,000, 90-day, 8% note dated July 8 from Miracle Chemical on account.Oct. 6The note is dishonored by Miracle Chemical.Nov. 5Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Miracle Chemical on October 6.
Dishonored Note
This term refers to a promissory note that has not been paid at maturity by the maker, resulting in default.
Interest for Days
Calculated as the interest rate on a loan or investment applied over a specified number of days.
Total Amount Charged
The total amount charged refers to the aggregate sum of all charges, fees, and expenses associated with a transaction or series of transactions.
- Register entries concerning notes receivable in accounting records and evaluate the interest due.
Verified Answer
Oct. 6 Accounts Receivable-Miracle Chemical ~~~~~~~ 183,600
~~~~~~~ Notes Receivable-Miracle Chemical 180,000\quad 180,000180,000
~~~~~~~ Interest Revenue ~~~~~~~ 3,600
Nov. 5 Cash ~~~~~~~ 185,130
~~~~~~~ Accounts Receivable-Miracle Chemical ~~~~~~~ 183,600
~~~~~~~ Interest Revenue ~~~~~~~ 1,530∗1,530 ^ { * }1,530∗
~~~~~~~ ∗$183,600×0.10×30/360=$1,530^* \$ 183,600 \times 0.10 \times 30 / 360 = \$ 1,530∗$183,600×0.10×30/360=$1,530
Learning Objectives
- Register entries concerning notes receivable in accounting records and evaluate the interest due.
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