ACCTG 241 Lecture 14: Chapter 14 Study Guide
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Select the term that best fits each of the following definitions and descriptions.
a. | Notes receivable |
b. | Nontrade receivables |
c. | Net realizable value |
d. | Direct write-off method |
e. | Interest-bearing note |
f. | Maturity date |
g. | Promissory note |
h. | Factoring receivables |
i. | Trade discount |
j. | Present value |
k. | Allowance method |
l. | Sales discount |
m. | Negotiable note |
n. | Non-interest-bearing note |
o. | Assignment of receivables |
p. | Valuation date |
____ 21. Receivables that are evidenced by a formal written promise to pay a certain sum of money at a specified date.
____ 22. The date the principal amount of a note is due to be paid.
____ 23. The sum of future receipts or payments discounted to the present date at an appropriate rate of interest.
____ 24. A method of recognizing the estimated losses from uncollectible accounts as expenses during the period in which the sales occur.
____ 25. A note that is legally transferable by endorsement and delivery.
____ 26. Any receivable arising from transactions that are not directly associated with the normal operating activities of a business.
____ 27. A note written in the form where the face amount includes the interest charges.
____ 28. The borrowing of money with receivables pledged as security on the loan.
____ 29. A note written in the form where the maker promises to pay the face amount plus interest at a specified rate.
____ 30. An unconditional written promise to pay a certain sum of money at a specified time.
On January 1 of Year 1, Bryson Company obtained a $197,000, four-year, 5% installment note from Campbell Bank. The note requires annual payments of $55,556, beginning on December 31 of Year 1.
Required:
a. Prepare a table for this installment note, similar to the one presented in Exhibit 4 . | |
b. Journalize the entries for the issuance of the note and the four annual note payments. Refer to the Chart of Accounts for exact wording of account titles. | |
c. Describe how the annual note payment would be reported on the Year 1 income statement. |
Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bryson Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Amortization Table
Shaded cells have feedback.
a. Prepare a table for this installment note, similar to the one presented in
Exhibit 4
. Round amounts to the nearest dollar.
Amortization of Installment Notes | |||||
A | B | C | D | E | |
For the Year Ending Dec. 31 | January 1 Carrying Amount | Note Payment | Interest Expense | Decrease in Notes Payable | Dec. 31 Carrying Amount |
Year 1 | |||||
Year 2 | |||||
Year 3 | |||||
Year 4 | |||||
Points:
20 / 23
Feedback
Check My Worka. Review
Exhibit 4
in the text. The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest.
After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full.
Journal
Shaded cells have feedback.
b. Journalize the entries for the issuance of the note and the four annual note payments. Enter transactions for Year 1 on page 10 of the journal, Year 2 on page 12, Year 3 on page 15, and Year 4 on page 17. Refer to the Chart of Accounts for exact wording of account titles.
Question not attempted.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
Score: 0/63
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 |
Points:
0 / 12
Question not attempted.
PAGE 12
JOURNAL
ACCOUNTING EQUATION
Score: 0/37
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 |
Points:
0 / 7
Question not attempted.
PAGE 15
JOURNAL
ACCOUNTING EQUATION
Score: 0/37
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 |